BRICS's New Development Bank
The New Development Bank (NDB), formerly referred to as the BRICS Development Bank, is a multilateral development bank set-up by the BRICS states. 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." It is seen as an optional to the existing US-dominated World Bank and International Monetary Fund.
Bank's Articles of Agreement specify that all the 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 the voting power. Expanding the NDB's membership is considered by some experts to be crucial to its long-term development by helping enhance the bank’s business growth. The bank’s primary focus on lending will be infrastructure projects. Unlike the World Bank, which assigns votes based on capital shares, here each participating country will be assigned one vote, and no country will have veto power. Countries apart from the BRICS countries will also be members- the bank will have some countries from ‘the south’ on a rotational basis, on the board of the bank, and they will be allowed to vote.
|Headquartered||BRICS Tower in Shanghai|
|The first regional office of the NDB is in Johannesburg, South Africa.|
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.
The initial authorized capital of the bank is $100 billion. The initial subscribed capital of the NDB is $50 billion divided into paid-in shares ($10 billion) and callable shares ($40 billion). The initial subscribed capital of the bank was equally allocated among the founding members. The Agreement on the NDB specifies that the voting power of each member will be equal to the number of its subscribed shares in the capital stock of the bank. No member can boost its share of capital without the other 4 members agreeing – a primary requirement of India.
Objectives of NDB
- Build a balanced project portfolio, giving a proper respect to their geographic location, financing requirements and other factors.
- Promote infrastructure and sustainable development projects with a significant development impact in BRICS and other emerging economies and developing countries.
- Establish an extensive network of global partnerships with other multilateral development institutions and national development banks.
BRICS came into existence because
- To defend BRICS economy from volatility in dollar exchange rate
- In the long run, it’ll make Chinese Yuan as an alternative to the US Dollar, for the global financial system
- BRICS – Collectively 1/5thof World GDP and 2/5th of world population
- No reforms in the IMF or Word Bank, which Highly dominated by USA & G7
The Union Cabinet has given its nod to Exim Bank of India for entering into a Memorandum of Understanding (MoU) on general cooperation with the New Development Bank (NDB). The MoU is a non-binding umbrella agreement aimed at establishing a cooperation framework in accordance with the national laws and regulations, besides skills transfer and knowledge sharing amongst the signatories.