New Development Bank
The New Development Bank, formerly referred to as the BRICS Development Bank, is a multilateral development bank established by the BRICS nations. According to the agreement, "the bank shall support public or private projects through loans, guarantees, equity participation and other financial instruments" and "shall cooperate with international organizations and other financial entities, and provide technical assistance for projects to be supported by the bank."
The initial authorized capital of the bank was 100 billion divided into one million shares having a par value of 100,000 each. The initial subscribed capital of the bank was 50 billion divided into 10 billion in paid-in shares and 40 billion in callable shares. It was equally distributed among the five founding members-Brazil, Russia, India, China, South Africa. The agreement on the NDB specifies that each founding member will have one vote and that no member would have any veto powers.
The bank is headquartered in Shanghai, China. The first regional office of the bank was opened in Johannesburg, South Africa in 2016. Subsequently, regional offices were established in São Paulo in Brazil, Ahmedabad in India and Moscow in Russia.
History
The idea for setting up the bank was proposed by India at the 4th BRICS summit in 2012 held in New Delhi. As the establishment of a development bank would help in simplifying mutual settlement and lending operations amongst the BRICS nations, reducing dependence on the US dollar and the Euro, the leaders of these nations agreed to set up anew multilateral development bank at the 5th BRICS summit held in Durban, South Africa on 27 March 2013. On 15 July 2014, on the first day of the 6th BRICS summit held in Fortaleza, Brazil, the five member states signed the agreement on the New Development Bank, which made provisions for the legal basis of the bank. In a separate agreement, a reserve currency pool worth 100 billion was set up by the members.File:The President, Development Bank of BRICS Countries, Shri K.V. Kamath calls on the Prime Minister, Shri Narendra Modi, in New Delhi on May 28, 2015.jpg|thumb|The president of the New Development Bank K.V. Kamath with the Indian prime minister Narendra Modi in May 2015
On 11 May 2015, K. V. Kamath was appointed as the first president of the bank. According to the bank, the policies and procedures for all functional areas were approved at the board of directors meeting in January 2016. On 27 February 2016, the NDB signed an agreement with the Government of China and local government of Shanghai to establish the headquarters of the bank in Shanghai. On 19 July 2016, the NDB reported that it successfully issued the bank's first green financial bond with issue size of RMB 3 billion, with a tenure of five years in the China interbank bond market.
On 20 July 2016, the first annual meeting of the NDB board of governors was held in Shanghai. The participants of the meeting discussed the bank's future work and development and gave a positive assessment to the bank's work. At the meeting, the first green financial bond issuance in renminbi was highlighted as a milestone event for the NDB. In 2016, the NDB board of directors approved the first set of projects in all members of the bank. On 21 December 2016, the NDB signed its first loan agreement. The NDB received AA+ credit ratings from S&P Global Ratings and Fitch Ratings in August 2018, which enables the bank to offer full suite of financial products to its public and private sector clients. In April 2020, the New Development Bank established an Emergency Assistance Facility that sought to finance costs related to the fight against the Coronavirus and soften the blow from the economic impact. In addition to committing US$5 billion to this cause, the NDB targeted to provide up to 10 billion dollars.
In March 2022, the NDB announced that "sound banking principles" required that all new transactions with Russia be put on hold. Even though the NDB quickly cut ties with Russia, Fitch Ratings still downgraded the NDB from stable to negative on its Long-Term Issuer Default scale. In May 2022, the New Development Bank set up a regional office in India in the state of Gujarat with the goal of financing and observing infrastructure projects in both India and Bangladesh. In May 2023, Saudi Arabia expressed its intention to join the NDB.
Structure and Objectives
Corporate Governance
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. Following Luiz Inácio Lula da Silva election, the Brazilian government solicited his renouncement, after then he was replaced by Dilma Rousseff by 24 March 2023.
Capital
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 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 be 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%.Objectives
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.
Membership
The NDB's Articles of Agreement specify that all members of the United Nations could be members of the bank, however the share of the original BRICS group can never be less than 55% of total voting power. The current voting power of the original five members is more than 90%.
In 2016, some experts considered that expanding the NDB's membership 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.
In September 2021, Bangladesh, the United Arab Emirates and Uruguay joined the NDB.
In December 2021, the NDB admitted Egypt as a new member. Algeria formally presented a request to join after the Algerian president visit to China in 2023, and was admitted as a member in 2024. Algeria officially has been given membership status of the BRICS New Development Bank in September 2024.
Potential or prospective members include Honduras, Serbia and Zimbabwe.
Shareholding structure
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.The current distribution of shares between NDB member countries is presented in the following table.
| Country | SHARES Shares subscribed | SHARES Exercisable votes | SUBSCRIBED CAPITAL Amount | SUBSCRIBED CAPITAL % of total |
| ' | 100,000 | 100,000 | 10.000 | 18.76 |
| ' | 100,000 | 100,000 | 10.000 | 18.76 |
| ' | 100,000 | 100,000 | 10.000 | 18.76 |
| ' | 100,000 | 100,000 | 10.000 | 18.76 |
| ' | 100,000 | 100,000 | 10.000 | 18.76 |
| ' | 6,140 | 6,140 | 0.614 | 1.15 |
| ' | 9,420 | 9,420 | 0.942 | 1.77 |
| ' | 11,960 | 11,960 | 1.196 | 2.24 |
| ' | 5,560 | 5,560 | 0.556 | 1.04 |
| ' | ||||
| ' | ||||
| ' | ||||
| ' | ||||
| Unallocated Shares | 466,920 | 466,920 | 46.692 | |
| Grand Total' | 1,000,000 | 1,000,000 | 100.000 | 100.00% |
Activities
Projects
According to the Bank's General Strategy, sustainable infrastructure development is at the core of NDB's operational strategy in 2017–2021, and the Bank will dedicate about two-thirds of financing commitments in its first five years to this area.The New Development Bank is planning to give a priority to projects aimed at developing renewable energy sources. As it was stated by the bank, it wants to cooperate with other institutions in accelerating ‘green’ financing expansion and promoting environment protection.
The NDB has expressed interest in funding projects that conform to high environmental standards, including those in the field of infrastructure, such as energy, railways and highways in the future. At the same time, according to K. V. Kamath, the NDB President, one of the key strategies of the bank will be financing profitable projects with return on capital. The NDB wants "to fund projects that are creative and bring benefits to the local people and environment", said Vice President Zhu Xian.
The leadership of the member countries task the bank with developing a strong pipeline of projects and responding in a fast and flexible manner to aspirations and interests of its members.
As of 6 March 2019, the NDB Board of Directors approved 30 projects with loans aggregating over approx. USD 8 billion.
The bank has begun non-sovereign operations with loans approved in Brazil, South Africa, and Russia. In May 2024, BRICS Development Bank announces to allocate US$1.115 bi to Rio Grande do Sul for rebuilding the urban and rural infrastructure after the 2024 floods.