New Development Bank - NDB


 
 
Concept Explanation
 

New Development Bank - NDB

NEW DEVEIOPMENT BANK: 

The New Development Bank (NDB), formerly referred to as the BRICS Development Bank, 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 organisations and other financial entities, and provide technical assistance for projects to be supported by the Bank.
  • The bank is headquartered in Shanghai, China. The first regional office of the NDB will be opened in Johannesburg, South Africa.
  • The idea for setting up the bank was proposed by India at the 4th BRICS summit in 2012 held in Delhi.
  • The creation of a new development bank was the main theme of the meeting. BRICS leaders agreed to set up a Development Bank at the 5th BRICS summit held in Durban, South Africa on 27 March 2013.
  • Objectives:  The bank aims to contribute to 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 summarised 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.
  • How NDB is different from AIIB?  Like New Development Bank, Asian Infrastructure Investment Bank (AIIB) is also a multilateral Development Bank and both have the same objective i.e. to provide an alternative to west dominated World Bank and IMF. However, there are two fundamental differences between the two.

  • Firstly, while members of AIIB are 57 countries predominantly of Asia and Pacific region; NDB has five BRICS countries has members.
  • Secondly, the largest shareholders in AIIB are China and India with 30.34% and 8.52% share respectively. These two countries have voting share of 26.06 and 7.5% respectively. Since China itself has more than 25% voting share, it is going to dominate the veto power in the decisions of the bank. On the other hand, decision making in the NDB is more democratic. Each member has one vote and decisions are taken by simple voting method.
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