New Development Bank(Snippets for Prelims)

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  • New Development Bank (NDB) is the first Multi-lateral Development Bank established by developing countries and emerging economies – Brazil, Russia, India, China and South Africa (BRICS) – in accordance with the agreement on New Development Bank signed on 15th July, 2014 in Fortaleza, Brazil.
  • The NDB members represent 42 percent of world population, 27 percent of the global surface area and accounting for over 20% of the Global GDP
  •  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.”
  •  The initial subscribed capital of the bank was equally distributed 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.
  • The bank is headquartered in Shanghai, China.
  • The first regional office of the NDB is in Johannesburg, South Africa.

Purpose of the bank:

  • The NDB was established aiming to mobilize resources for infrastructure and sustainable development projects in BRICS and other emerging economies and developing countries, complementing the existing efforts of multilateral and regional fi­nancial institutions for global growth and development.
  • The five member nations – Brazil, Russia, India, China and South Africa – have an equal shareholding in the NDB


  • 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.] According to Devex, the name of the bank is believed to have been proposed by Indian Prime Minister Narendra Modi.
  • On 15 July 2014, the first day of the 6th BRICS summit held in Fortaleza, Brazil, the BRICS states signed the Agreement on the New Development Bank, which makes provisions for the legal basis of the bank
  • The 7th BRICS summit in July 2015 marked the entry into force of the Agreement on the New Development Bank.


  • The Agreement on the New Development Bank entered into force in July 2015, with the ratification of all five states that have signed it.
  • The five founding members of the Bank include Brazil, Russia, India, China and South Africa.
  • Bank’s Articles of Agreement specify that all 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 voting power.


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 will be elected on a rotational basis from one of the founding members, and there will be at least one Vice President from each of the other four founding members. V. Kamath, from India, is the first elected president of the NDB.


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 summarized as follows

  1. Promote infrastructure and sustainable development projects with a significant development impact in member countries.
  2. Establish an extensive network of global partnerships with other multilateral development institutions and national development banks.
  3. Build a balanced project portfolio giving a proper respect to their geographic location, financing requirements and other factors.

India and NDB

  1. India signs First Loan Agreement with New Development Bank for US$ 350 million for Development and Up-gradation of Major District Roads Project in Madhya Pradesh 
  • The Government of the Republic of India and the New Development Bank signed a Loan Agreement in 2017 approving the provision of sovereign project finance facility of USD 350 million for the first project that will be financed by the NDB in India — Madhya Pradesh Major District Roads Upgrade Project.
  • The Project will result in reconstruction and rehabilitation of approx. 1,500 km of roads to improve connectivity of the interior regions of the state with the national and state highway networks, with a focus on all-weather road availability and improved road maintenance and asset management. It will foster inclusive economic growth through increased incomes as a result of improved connectivity and access to markets for interior regions of the state.

2. India Signs Second Loan Agreement with New Development Bank for USD 100 Million for Rajasthan Water Sector Restructuring Project for Desert Areas 

The Loan Agreement for financing of Rajasthan Water Sector Restructuring Project for the Desert Areas was signed between Government of India and the New Development Bank (NDB) on 13th February 2018 at New Delhi. This is the first tranche loan of USD 100 million approved by the NDB under the Multi Tranche Financing Facility of USD 345 million for this project.

The objective of this Project is to rehabilitate the 678 km long Indira Gandhi Canal system built during 1958-63 to prevent seepage, conserve water, and enhance water use efficiency as mandated by both national and state level policies on water use. The execution of the project would multiple benefits such as:

  1. Arresting the seepage by rehabilitating the deteriorating canal lining of the Indira Gandhi Nahar Project (IGNP) which needs urgent attention;
  2. Rehabilitation of waterlogged areas;
  3. Modernization and optimization of the irrigation management practices in the project area by involvement of the water users’ associations (WUA) in the command area
  4. Strengthening of drinking water supply and irrigation facilities in the project area

The project implementation period is 6 years. Government of Rajasthan will implement the project primarily through Rajasthan Water Resources Department.


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