US President Joe Biden said on Thursday that Washington is nominating former Mastercard chief executive Ajay Banga to lead the World Bank, after its current chief David Malpass announced plans to step down early.

The development lender has just started accepting candidate nominations in a process set to run until March 29, with the bank saying women candidates would be "strongly" encouraged.

The president of the World Bank is typically American, while the head of the International Monetary Fund is customarily European.

Banga, 63, is Indian-American and currently serving as vice chairman at equity firm General Atlantic.

He was previously chief executive officer at Mastercard.

Banga has "critical experience mobilizing public-private resources to tackle the most urgent challenges of our time, including climate change," said Biden in a statement.

His nomination comes amid a push for development lenders to revamp and address global problems like environmental issues more effectively.

US Treasury Secretary Janet Yellen earlier said that lenders' core models, where countries borrow to make specific investments addressing developmental constraints, is "insufficient to meet the moment."

The United States is the World Bank's largest shareholder. (AFP)