What is the New Development Bank and how does it differ from the World Bank?

The New Development Bank (NDB) is a multilateral development bank established by BRICS countries in 2015 to finance infrastructure and sustainable development projects. Unlike the World Bank, where voting power is proportional to capital contribution and dominated by developed countries, the NDB operates on equal shareholding among founding members (20% each). The NDB has a streamlined approval process (12-18 months vs 24-36 months for World Bank), lends in local currencies to reduce foreign exchange risks, and maintains a non-interference policy respecting borrowing countries' sovereignty. While the World Bank often requires structural adjustment programs and policy conditionalities, the NDB focuses primarily on project viability and technical feasibility.

What is India's role and contribution to the New Development Bank?

India is a founding member of the NDB with a 20% shareholding and has contributed US$ 10 billion to the bank's initial subscribed capital. India played a crucial role in the bank's conceptualization, with the idea first proposed during India's BRICS chairmanship in 2012. K.V. Kamath served as the NDB's first President (2015-2020). India hosts the NDB's regional office in Mumbai, which serves as the hub for South Asian operations. India has received significant financing from the NDB, including projects like Mumbai Metro (US$ 536 million), Rajasthan Solar Park (US$ 975 million), and various renewable energy initiatives totaling over US$ 3 billion.

Which countries are currently members of the New Development Bank?

The NDB currently has nine members. The five founding members are the BRICS countries: Brazil, Russia, India, China, and South Africa, each holding equal 20% shareholding. Four new members have joined since 2021: Bangladesh (2021), United Arab Emirates (2021), Uruguay (2023), and Egypt (2023). The bank's expansion strategy aims to include 15-20 members by 2025, focusing on emerging economies and developing countries. The admission process requires consensus among existing members and adherence to the bank's operational principles of sustainable development and South-South cooperation.

What types of projects does the New Development Bank finance in India?

The NDB finances diverse infrastructure and sustainable development projects in India across multiple sectors. Major project categories include renewable energy (solar and wind parks, grid infrastructure), transportation (metro systems, highways, railways), water management (irrigation, urban water supply), and digital infrastructure. Notable approved projects include Mumbai Metro Lines 2A and 7, Rajasthan Solar Park, Karnataka State Highway Improvement, Andhra Pradesh Rural Water Supply, and Multi-tranche Financing Facility for renewable energy. The bank prioritizes projects that contribute to India's sustainable development goals, climate commitments, and economic growth while maintaining commercial viability.

How does the New Development Bank's governance structure work?

The NDB operates through a three-tier governance structure ensuring democratic decision-making. The Board of Governors, comprising finance ministers from member countries, is the highest decision-making body that meets annually to set strategic direction and approve major policies. The Board of Directors, with representatives from each member country, provides operational oversight and approves individual projects and policies. The Management, led by a rotating President and regional Vice Presidents, handles day-to-day operations. The presidency rotates among founding members every five years, with India's K.V. Kamath serving as the first President (2015-2020), followed by Brazil's representatives.

What is the capital structure of the New Development Bank?

The NDB has an authorized capital of US$ 100 billion with initial subscribed capital of US$ 50 billion. The founding BRICS members each contributed US$ 10 billion, maintaining equal 20% shareholding and voting rights. The paid-in capital is US$ 10 billion, contributed equally by founding members over seven years. New members contribute based on their economic size and the bank's capital needs at the time of admission. The bank maintains a conservative debt-to-equity ratio not exceeding 2.5:1 and aims to achieve AAA credit rating by 2025. This capital structure enables the bank to leverage funds and provide loans worth approximately US$ 250 billion over its operational lifetime.

How does the NDB select and approve projects for funding?

The NDB follows a streamlined project selection and approval process based on technical feasibility, financial viability, and sustainable development impact. Projects must align with borrowing countries' national development priorities and contribute to economic growth, social development, or environmental sustainability. The evaluation process includes technical due diligence, environmental and social impact assessment, and financial analysis. Unlike traditional multilateral banks, the NDB does not impose policy conditionalities or structural adjustment requirements. The approval process typically takes 12-18 months, significantly faster than traditional development banks. Projects are approved by the Board of Directors based on management recommendations and country requests.

What was the NDB's response to the COVID-19 pandemic?

The NDB demonstrated institutional agility during COVID-19 by launching a US$ 10 billion Emergency Assistance Program in 2020. This program provided rapid financing for healthcare infrastructure, medical equipment procurement, and economic recovery measures across member countries. India received US$ 1 billion in emergency assistance for strengthening healthcare systems and supporting economic recovery programs. The program featured expedited approval processes, flexible disbursement mechanisms, and reduced documentation requirements. This crisis response highlighted the NDB's ability to provide counter-cyclical financing during global emergencies, contrasting with traditional multilateral banks that often reduce lending during crises.

How does the New Development Bank contribute to South-South cooperation?

The NDB embodies South-South cooperation principles by providing a platform for emerging economies to share development experiences, technologies, and resources. The bank facilitates knowledge exchange among member countries through technical assistance programs, capacity building initiatives, and best practice sharing. Unlike North-South aid relationships that often involve conditionalities and dependency, the NDB promotes horizontal partnerships based on mutual respect and shared development challenges. The bank's expansion to include countries like Bangladesh, UAE, Uruguay, and Egypt strengthens South-South networks and provides alternative financing options for developing countries seeking to reduce dependence on Western-dominated institutions.

What are the main challenges facing the New Development Bank?

The NDB faces several operational and strategic challenges. Credit rating agencies initially assigned lower ratings compared to established multilateral banks, affecting borrowing costs and market access. The bank's relatively small capital base limits lending capacity compared to institutions like the World Bank. Coordination among diverse member countries with different political systems, development priorities, and economic conditions poses governance challenges. Environmental and social safeguards require continuous strengthening to maintain international credibility. Competition from other development banks and commercial lenders affects project pipeline development. The bank must balance rapid expansion with institutional capacity building while maintaining financial sustainability and development impact.

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The New Development Bank (NDB) was established by the Agreement on the New Development Bank signed by the BRICS countries (Brazil, Russia, India, China, and South Africa) on July 15, 2014, in Fortaleza, Brazil. Article 1 of the Agreement states: 'The purpose of the Bank shall be to mobilize resources for infrastructure and sustainable development projects in BRICS and other emerging economies and …

Quick Summary

The New Development Bank (NDB) is a multilateral development bank established by BRICS countries (Brazil, Russia, India, China, South Africa) in 2015, headquartered in Shanghai with US$ 100 billion authorized capital.

Key features include equal shareholding among founding members (20% each), democratic governance structure, and focus on infrastructure and sustainable development projects. Unlike traditional development banks, NDB offers faster approval processes (12-18 months), local currency lending, and non-interference policies.

India contributed US $10 billion as founding member and hosts regional office in Mumbai. Major Indian projects include Mumbai Metro (US$ 536 million), Rajasthan Solar Park (US$ 975 million), and renewable energy initiatives.

The bank has expanded to include Bangladesh, UAE, Uruguay, and Egypt as new members. NDB represents alternative South-South cooperation mechanism, challenging Western-dominated financial institutions.

During COVID-19, it provided US $10 billion emergency assistance, with India receiving US$ 1 billion. The bank aims to achieve AAA credit rating by 2025 and expand membership to 15-20 countries, supporting global infrastructure investment estimated at US$ 94 trillion by 2040.

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NDB established 2015 by BRICS, HQ Shanghai

100B authorized, US

50B subscribed capital

Equal 20% shareholding among founding members

9 current members: BRICS + Bangladesh, UAE, Uruguay, Egypt

K.V. Kamath first President (2015-2020)

India: US$ 10B contribution, Mumbai regional office

Major Indian projects: Mumbai Metro US

536M, Rajasthan Solar US

975M

COVID-19: US

10B emergency program, India received US

Key features: local currency lending, faster approvals, no conditionalities

Vyyuha Quick Recall - 'BRICS BANK Shanghai': B-Brazil, R-Russia, I-India, C-China, S-South Africa established BANK in Shanghai with 100 Billion authorized capital, equal 20% shareholding, K.V. Kamath first President. New members: 'BLUE' - Bangladesh, UAE, Uruguay, Egypt. India's benefits: 'FAST' - Financing Alternative, Soft power projection, Technology sharing, Strategic autonomy. Key projects: 'MRK' - Mumbai Metro, Rajasthan Solar, Karnataka Highway.

New Development Bank

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