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NDB is created as a multilateral financial institution by the BRICS countries Brazil, Russia, India, China, and South Africa. It was established in 2014 at the 6th BRICS summit in Brazil. The headquarters of NDB is in Shanghai, China. Initially, it was established to support and coordinate infrastructure and sustainable development efforts in BRICS countries and other emerging, deprived nations for faster economic growth through innovation and advanced technology. The Bank works for the various public and private projects through loans, equity, and other financial tools to fulfil its objectives.
History of NDB formation
- India raised the plan behind the formation of NDB at the fourth BRICS summit (2012) in New Delhi.
- Later, BRICS members agreed to establish a Development Bank at the 5th BRICS in Durban, South Africa, in 2013.
- Consequently, a formation treaty was signed in 2014 in Fortaleza, Brazil, at the Sixth BRICS Summit.
- In 2016, after the Headquarters Agreement in Shanghai, China, NDB became fully operational.
- It is to be stated in the agreement that the New Development Bank would increase the economic growth of the nations and the cooperation among BRICS member countries.
- In 2018 the United Nations General Assembly conferred NDB as an ‘observer’ for establishing active and fruitful collaboration with the UN.
Major areas of working
Let us look at the major areas of working of the NDB:
- Fostering economic development of member countries
- Promoting competitiveness among the countries and increasing the opportunity for Job creation.
- Working as a knowledge-sharing platform among the countries.
- Urban development
- Transport infrastructure
- Clean energy, irrigation, water Resource Management and Sanitation
- Digital Infrastructure and its development
- Environment efficiency and its protection
- Social support and guidance
- Covid- 19 emergency measures
NDB’s Member Countries
Following are the countries that are the members of the New Development Bank:
- In 2021, the New Development Bank declared UAE, Bangladesh, and Uruguay, its new members. Later, the Bank included Egypt as its fourth new member. The main aim of expanding NDB membership is to activate and utilise resources for the sustainable development of these emerging developing nations.
New Development Bank Administration
- A board of Governors governs the BRICS Bank. It comprises the finance ministers of each member nation.
- The voting power is dependent on each member country’s shareholding in this Bank. Now, all the members have uniform voting rights. None of the member countries have veto power.
- It is noteworthy that the membership of NDB is welcoming to all member countries of the UN, but the share of the BRICS countries can never be less than 55% of electoral voting.
- In February 2021, AA+ long term and A-1+ short term issuer credit ratings were duly allocated to the Bank with a stable outlook by S&P Global Ratings.
- NDB’s president is elected from among the member countries. There are four vice presidents in the NDB.
Notable Achievements of New Development Bank
- In Nov 2020 New Development Bank successfully invested in various projects in the five BRICS countries, worth USD 21 billion, and emphasised clean energy, urban development, transport, social infrastructure, and environment.
- Almost 27% of NDB’s project acceptance is labelled in by using local currencies of the borrowing member countries in place of USD.
- NDB accesses various criteria designed by borrower countries for environmental and social standards.
- It has set up partnerships with various development banks, e.g., World Bank, Asian Infrastructure Development Bank, etc.
- Rating agencies have evaluated positive ratings to BRICS Bank for its development financing.
- NDB discharged several useful bonds, such as green bonds.
- In the middle of the Covid- 19 pandemic, the Bank assisted its member countries through Emergency Assistance programs (10 billion USD) to tackle the global crisis.
Political Crisis among member countries in New Development Bank
- The inadequate relationship between China and India and the political uncertainty in South Africa and Brazil made it difficult for NDB to work for fruitful cooperation and sustainable development.
- NDB’s main concern is to continue working for the welfare of developing nations, but in a political crisis, it is very tough to decide which member countries don’t seem to come through.
- NDB has approved loans for renewable energy resources in India, but it has termed several questions regarding the environmental crisis.
- The same thing happened in Brazil too. The sustainable project on the Trans Amazonian highway in Brazil labelled several controversies on deforestation and environmental degradation.
New Development Bank and India
- In India, the BRICS Bank has approved 18 projects with emergency loans of 2 USD billion to support the health crisis and economic revival in the post Covid- 19 situation.
- Recently New Development Bank will work as the first multilateral financial agency in Gujarat International Finance Tech City (GIFT).
- It has committed to supporting various infrastructure projects in India, for instance, Delhi – Ghaziabad – Meerut Regional Transit project, renewable energy projects, etc.
- It has sanctioned 14 Indian infrastructure projects worth USD 4.2 billion.
- In 2020 India declared a 1 Billion dollar financing agreement with the New Development Bank for rural development.
Upcoming approaches of NDB
- Special emphasis on developing health care facilities and nationwide health preparedness for the member countries.
- Work as a supporting system toward social and economic development.
- Emphasis on investment for stimulating urban resilience in metropolitan areas and observing environmental degradation and climate change in densely populated member countries.
- Concern for more environmentally-friendly sustainable projects.
- Focus on renewable energy technologies such as solar, wind, etc., to improve the overall energy consumption in the world.
- Make targets to obtain public-private partnerships for economic sustainability across the country.
Conclusion
The crucial role of the New Development Bank is to lead various projects that help promote sustainable development in every sector. The expansion of NDB membership is equally significant in this matter. NDB also collaborates with other financial institutions to broaden the funding and promote environmental preservation. It will surely work for various long-term development projects in emerging countries in the upcoming days.
