New Development Bank (NDB)

Why in news?

• New Development Bank (NDB) is setting up a regional office in Gujarat, India for funding and monitoring infrastructure projects in that country and Bangladesh.

About NDB:

• The New Development Bank (NDB) is a multilateral development bank (MDB) established by Brazil, Russia, India, China and South Africa (BRICS)
• It was established in 2014, at the 6th BRICS Summit at Fortaleza, Brazil.
• The prime objective of NDB is financing infrastructure and sustainable development projects in BRICS and other emerging economies and developing countries.
• According to the Agreement on the NDB, "the Bank shall support public or private projects through loans, guarantees, equity participation and other financial instruments."
• NDB’s work complements the efforts of multilateral and regional financial institutions, toward global growth and development.
• The initial authorized capital of the bank is $100 billion divided into 1 million shares. The initial subscribed capital of the bank was equally distributed among the founding members.
• It is headquartered in Shanghai, China.

Objectives:

• Fostering development of member countries.
• Supporting economic growth.
• Promoting competitiveness and facilitating job creation.
• Building a knowledge sharing platform among developing countries

Voting:

• Unlike the World Bank and IMF, which assign votes based on capital share, in the New Development Bank each participant country will be assigned one vote, and none of the countries will have veto power.

Add on:

• In 2018, the NDB received observer status in the United Nations General Assembly, establishing a firm basis for active and fruitful cooperation with the UN.
• 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.

PRELIMS QUESTION

Which of the following statements is/are correct regarding ‘New Development Bank’ (NDB)?

1. NDB’s Articles of Agreement specify that all members of the United Nations could be members of the bank

2. The bank does not finance private sector projects.

Select the correct answer using the codes given below:

(a) 1 only

(b) 2 only

(c) Both 1 and 2

(d) Neither 1 nor 2

Answer