The New Development Bank (NDB) is a multilateral bank created in the backdrop of a fundamental shift in the global economy in the last one and a half-decade. The need for the New Development Bank is also crucial because of the radical shift in the global economic sphere toward developing countries, specifically in Asia. Comprising over 40% of the world’s population and generating around 22% of the global GDP, the New Development Bank is seen as a counterweight to the West and developed countries led global development institutions like the International Monetary Fund (IMF) and the World Bank. 

With the rise in the hegemonic environment of development institutions led by developed countries, the need for a New Development Bank strengthened with time. Factors such as environmentally unsustainable projects, the weakening of the local currency and the stronghold of a dollar in repayment of loans also led to the emerging bloc creating a regional development institution that would complement the global institutions like IMF and World Bank by plugging the gap of investments between developed and developing nations.

Need for a New Development Bank

With the West-led development of financial institutions, the need for the New Development Bank rose to complement and challenge the institutions having dominance and significant control over the global financial scenario. The need had also arised due to the increasing demographic and economic share of the BRICS nations in the world. The BRICS nations comprise the world’s five big economies with significant influence on international affairs. 

How will the NDB pave the way for better representation of developing nations? 

  • The NDB is mooting to plug the huge gap between finance availability and current investment, providing an increased representation to BRICS member nations and emerging and developing countries. However, this will not challenge but only complement the role of global developing institutions. 
  • To bypass the financial sanctions often imposed by powerful nations and global development institutions to increase hegemony, the NDB will enable the member nations to enter into currency swap agreements to facilitate trade deals in domestic countries. 
  • Despite the huge variation in the economic size of BRICS member nations, the NDB was created on an equal share basis with a fair role in its governance. 
  • The NDB prioritises building essential infrastructure and ushering industrialization of the BRICS countries and member nations. 
  • While the global development institutions have failed to fully fund the gap required for new infrastructure investment, the NDB aims to complement them, ensuring increased regional collaboration to bring economic prosperity for all. 
  • With sustainability as its core element, NDB’s approach proposes no compromise on social and environmental safeguards, thereby upholding high standards of good governance. 
  • Not bound by any ideological doctrine, the NDB founding members believed in pragmatism to innovate and experiment rather than follow the classic development models. 
  • As a new development institution, NDB’s functioning is focused on simplifying the existing processes, which have decelerated the delivery of large infrastructure projects. In simple words, NDB is expected to be more agile and less bureaucratic than existing development institutions and multilateral banks.
  • Aiming at reformed multilateralism, the NDB emphasises the importance of regional balance rather than hegemony. The membership to NDB is open for all UN member nations, provided the share of the BRICS Nations can never be less than 55% of the voting power. 

What is New Development Bank? 

Formerly known as the BRICS Development Bank, the New Development Bank is a multilateral development Bank formed by the BRICS countries Brazil, Russia, India, China and South Africa. Founded on July 15, 2014 at the 6th BRICS summit in Fortaleza, Brazil. The NDB aims to mobilise resources for infrastructure and sustainable development projects in member nations and other developing countries and emerging markets. The NDB offers support for public and private projects through various measures like loans, guarantees, equity participation and other financial instruments. 

  • India raised the idea behind NDB at the 4th BRICS summit in New Delhi in 2012.

After four years of its formation, it achieved the ‘Observer’ status at the United Nations General Assembly (UNGA). 

  • The bank has its headquarter in Shanghai, China with regional offices in all member nations except India.
  • The NDB president is elected on a rotational basis from one among the five founding members. 
  • The NDB comprises the Board of Governors, Board of Directors, a President and four Vice -Presidents from each of the other four member nations.
  • K. V. Kamath, an Indian, was the first elected president of the NDB. 
  • In September 2021, NDB admitted the United Arab Emirates (UAE), Uruguay and Bangladesh as its first three new member countries. 
  • Later, in December 2021, Egypt was admitted as the fourth new member of New Development Bank. 
  • The key areas of operation of NDB are – 

            Clean Energy, Urban Development, Environmental Efficiency, Transport Infrastructure, Irrigation, Water Resource Management and Sanitation, Social Infrastructure, Multi-theme, Digital Infrastructure, COVID-19 Emergency Assistance

Conclusion

Amid the multi-polarity and plurilateral rise, the NDB focuses on reformed multilateralism with sustainable development at its core. Projected as a developmental financial institution that can complement West dominated global financial institutions in development, the NDB aims to establish a global partnership with other multilateral development institutions. NDB’s more agile and practical approach to development fosters balanced regional development and curbs the investment gap not achieved by global development institutions and banks.