New Development Bank (NDB): Membership, Indian Projects, Concerns [UPSC Economy Notes]

By K Balaji|Updated : June 28th, 2022

The New Development Bank is a multilateral financial institution that helps provide sustainable development-boosting economies by developing the existing infrastructure and livelihoods of member countries. Originally it was known as BRICS Development Bank, as it is a global development bank founded by the countries of the BRICS (Brazil, Russia, India, China, and South Africa). The headquarter of NDB is in China.

The New Development Bank finds its relevance under the international relations of the UPSC syllabus and that’s why it’s crucial for the candidates to understand this topic. To strengthen their basic knowledge of the New Development Bank candidates must go through this article, and have an effective preparation for the UPSC exam.

Table of Content

What is a New Development Bank?

The New Development Bank is a multilateral bank that was established in 2014 by the BRICS countries.

  • This bank was established with the purpose of supporting infrastructure development and boosting the economies of the member countries.
  • The New Development Bank was also provided with the status of an observer by the United Nations General Assembly in 2018 because it laid the groundwork for effective collaboration with the United Nations.
  • The headquarters of the New Development Bank is situated in Shanghai, China.

Key Areas of Operation of New Development Bank

There are certain key areas of operation of the New Development Bank. New Development Bank has diversified its portfolio by working on the following areas of operations.

Areas of Operation

Description

Clean Energy

The issue of Clean Energy has been the focus of the New Development Bank and it has already approved 15 Clean Energy projects within the period between 2016 to 2020.

Transport Infrastructure

The transport infrastructure is the important operational area of the New Development Bank and between the period of 2016 to 2020, it has approved about 17 projects in the field of transport infrastructure.

Irrigation, Water Resource Management, and Sanitation

The bank's portfolio has also featured an important key area of irrigation and water resources since 2017, and till now about 1.9 billion dollars have been allotted to approve seven projects in this field.

Urban Development

Urban Development is the new feature added in the operational area of the New Development Bank in 2018 and 14 Urban Development projects have been approved by 2020.

Environmental Efficiency

The environmental efficiency operational area entered the New Development Bank portfolio in 2017 and between 2016 to 2020 it has approved 1.2 billion dollars for 4 environmental efficiency projects.

Social Infrastructure

New Development Banks are expected to build and upgrade about 58 schools. However, between 2016 and 2020 the bank approved three big infrastructure projects.

Digital Infrastructure

The Digital information area of operation has been included recently in the list of New Development Banks in 2020. The New Development Bank has approved the project loan of about 300 million for cellular Networks and cloud services expansion in Russia.

Multi-Theme

The multi-theme operational areas were included in New Development Banks in 2019 and has approved for the multi-theme project that totals about 1.6 billion dollars.

Covid-19 Emergency Assistance

Corona has hit the entire world badly and NDB has taken a great step in response to covid-19 by providing a total of about tell me Indian dollars as emergency assistance. Also, it has approved 6 loans in 2020.

Objectives of the New Development Bank

The objectives of the New Development Bank are

  • to help in enhancing the economies and development of the member countries.
  • to boost the economic growth of the member countries.
  • It promotes competitiveness among individuals in order to obtain the best for the development of their country.
  • In order to create a massive development pact, it also helps in promoting the sustainable development of the countries.
  • Apart from all these things, another key objective of the New Development Bank is to create a global network with the multilateral development banks by collaborating with them.

Governance of New Development Bank

The New Development Bank is governed by a board of directors that comprises the finance ministers of the BRICS nations. In this process, all the members are provided with equal voting rights.

  • Whatever country holds the largest number of shares in the New Development Bank, its voting power depends on the shareholding in the bank.
  • The first president of the New Development Bank was K.V. Kamath. And the current president of the New Development Bank is Marcos Prado Tryojo, from Brazil.

Membership in New Development Bank

Brazil, India, Russia, South Africa, and China are the founding members of the New Development Bank. This new development bank came into existence in July 2015.

  • The New Development Bank has an agreement that says that every member of the United Nations is eligible to join the membership of the New Development Bank, but the members of BRICS are eligible only on the condition that the voting power should not be less than 55%.
  • However, it is believed that increasing the membership of the New Development Bank may affect its working style and operations. Hence, the New Development Bank gradually grows its membership in accordance with its strategies in such a way that it does not hamper the operational activities and decision-making of the bank.
  • Four new countries have recently joined the New Development Bank in 2021. Bangladesh Uruguay and the UAE joined the New Development Bank in September 2021, and Egypt joined the New Development Bank in December 2021.

Indian Projects funded by New Development Bank

There are many projects in India that are funded by New Development Bank. they are -

  • Mumbai Metro Rail, Delhi Ghaziabad Meerut's Regional Rapid Transit System, and many other Renewable Energy projects are on the count by the New Development Bank for funding in India.
  • As of now, the National Development Bank has funded about 14 Indian projects that roughly total 4.2 billion dollars.
  • Also, the New Development Bank has agreed to provide a billion-dollar fund to India for improving the infrastructure and providing employment to the rural population.

New Development Bank Achievements

Below are some of the great achievements of the New Development Bank-

  • The bank has been able to invest in the BRICS country's infrastructural projects. In the month of November 2020, the new Development bank approved the projects in five bricks countries that range in the sectors like transport infrastructure, Urban Development, clean energy, environmental efficiency, and social infrastructure. It has invested about 21 Billion Dollars in these areas.
  • Bank project approvals are largely denominated in the local currency of the borrowing members instead of US dollars it has approved. Currency volatility risk and its detrimental impact on project class flow are the reason why the bank has taken this step.
  • Another remarkable achievement of the National Development Bank is its ability to operate at a growing phase despite the Geo political changes faced by its member countries.
  • Also, the New Development Bank had decided to offer 10 billion dollar help to its members as emergency assistance in response to the covid-19 and its aftermath.

New Development Bank Concerns

Following are some of the concerns related to the New Development Bank.

  • Several criticisms have been made about the New Development Bank for its financing of environmentally unsustainable projects. For example, Brazil received heavy criticism to finance a highway project called the trans-Amazon highway which most environmentalists claim will have a negative impact on the Amazon forests.
  • While approving the projects the bank has typically taken into account the socio-environmental standards of the borrowing country.
  • As stated in its purpose statement the bank should develop a set of internal compliance standards to balance the economic reward along with the environmental concerns if it really intends to support more environment-friendly sustainable projects.
  • To keep the environmental damage from outgoing the project's economic benefits the New Development bank should take necessary precautions to avoid it.

New Development Bank UPSC

The New Development Bank is a part of the international relations and current affairs of the UPSC Syllabus. That’s why the UPSC aspirants preparing for UPSC Prelims or UPSC Mains exam must go through the New Development Bank UPSC notes to have an effective preparation. Aspirants also must check the UPSC Previous Year Question Paper to find out the types of questions asked on this topic.

New Development Bank UPSC Notes PDF

We have covered all the above-mentioned information on New Development Bank in a PDF file. Candidates can download the PDF file directly from the given link below and kickstart their preparation for the UPSC Exam.

>> Download New Development Bank UPSC Notes PDF

New Development Bank UPSC Prelims Sample Question

Question:- Follow the statement given below and answer-

  1. The New Development Bank is originally called the World Bank.
  2. Uruguay and Bangladesh have recently joined the New Development Bank.

Choose the correct option-

A) 1 only

B) 2 only

C) 1 and 2

D) None of the above

Answer:- Option B

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FAQs on New Development Bank(NDB)

  • The New Development Bank (NDB) is a multilateral development bank that was established by the BRICS countries in 2014 to support the infrastructure and sustainable development efforts in the BRICS and other underdeveloped emerging economies.

  • The major function of the New Development Bank is to fund the big infrastructural projects, and development funds for the emerging economies like India and Brazil.

  • The first development bank of India is the Industrial Finance Corporation of India.

  • Brazil, India, Russia, China, and South Africa are the five founding members of the New Development Bank.

  • The headquarters of the New Development Bank is situated in Shanghai, China.

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