Finance and Corporate Affairs Minister Nirmala Sitharaman has urged the New Development Bank (NDB) to consider working closely with India’s new development financing institution for funding infrastructure.
NDB has so far approved 18 projects in India, including emergency loans of $2 billion to support health spending and economic recovery in the aftermath of the COVID-19 pandemic.
- The New Development Bank (NDB), formerly referred to as the BRICS Development Bank,
- Formation: July 2014 (Treaty signed) , July 2015 (Treaty in force)
- It is a multilateral development bank
- Established by the BRICS states (Brazil, Russia, India, China and South Africa).
- According to the Agreement on the NDB, “the Bank shall support public or private projects through loans, guarantees, equity participation and other financial instruments.” Moreover, the NDB “shall cooperate with international organizations and other financial entities, and provide technical assistance for projects to be supported by the Bank.”
- NDB is currently headquartered in BRICS Tower (former Oriental Financial Centre) in Shanghai
Structure and Objectives
According to the Articles of Agreement, the main organs of the bank are:
- Board of Governors
- Board of Directors
- President and Vice-Presidents
The NDB President is elected on a rotational basis from one of the founding members, and there are four Vice Presidents from each of the other four founding members.
K. V. Kamath, from India, is the first elected president of the NDB. He was replaced as president by Marcos Prado Troyjo from Brazil since 7 July 2020. Marcos Troyjo was elected president of the New Development Bank on 27 May 2020.
The New Development Bank has an initial subscribed capital of US$50 billion and an initial authorized capital of US$100 billion. The initial subscribed capital is be equally distributed among the founding members. The payment of the amount initially subscribed by each founding member to the paid-in capital stock of the Bank will made in dollars in 7 installments. Each member cannot increase its share of capital without all other four members agreeing. The bank will allow new members to join but the BRICS capital share cannot fall below 55%.
The bank aims to contribute to the development plans established nationally through projects that are socially, environmentally and economically sustainable. Taking this into account, the main objectives of the NDB can be summarized as follows
- Promote infrastructure and sustainable development projects with a significant development impact in member countries.
- Establish an extensive network of global partnerships with other multilateral development institutions and national development banks.
- Build a balanced project portfolio giving a proper respect to their geographic location, financing requirements and other factors.
The Agreement on the New Development Bank entered into force in July 2015, with the official declaration of all five states that have signed it. The five founding members of the Bank include Brazil, Russia, India, China and South Africa.
Bank’s Articles of Agreement specify that all members of the United Nations could be members of the bank, however the share of the BRICS nations can never be less than 55% of voting power.
Expanding the NDB’s membership is considered by some experts to be crucial to its long-term development by helping boost the bank’s business growth.
According to the Bank’s General Strategy: 2017–2021, the NDB plans to expand membership gradually so as not to overly strain its operational and decision-making capacity.
According to Articles of Agreement of the New Development Bank, the initial authorized capital of the bank is divided into 1 million shares, having a par value of $100,000. Each founding member of the bank has initially subscribed 100,000 shares, in a total of $10 billion, of which 20,000 shares correspond to paid-in capital, in a total of $2 billion and 80,000 shares correspond to callable capital, in a total of $8 billion.