New Development bank

In Context

• New Development Bank announced to set up its regional office in GIFT City (Gujarat), India.

New Development Bank

• About:
  • It is a multilateral development bank operated by the BRICS states (Brazil, Russia, India, China and South Africa).
  • HQ: Shanghai, China
• Establishment: 
  • Agreed by BRICS leaders at the 5th BRICS summit held in Durban, South Africa in 2013. 
  • It was established in 2014, at the 6th BRICS Summit at Fortaleza, Brazil.
• New members: 
  • The Bank’s membership is open to members of the UN. 
  • Bangladesh & UAE joined as new members in 2021. Other members like Egypt & Uruguay are the prospective members.
    • Prospective members listed herein have been admitted by NDB’s Board of Governors and will officially become a member country once they deposit their instrument of accession. 
• Aim & Objectives: 
  • Foster greater financial and development cooperation.
  • Mobilise resources for infrastructure and sustainable development projects in BRICS & other emerging economies.
• Voting method:
  • The initial subscribed capital (USD 100 billion) was equally distributed amongst the founding members. 
  • The number of shares to be initially subscribed by other members shall be determined by the Board of Governors by the special majority on the occasion of the acceptance of their accession.
  • None of the countries has the veto power.
• In 2018, the NDB received observer status in the United Nations General Assembly.

How is NDB different from AIIB?

• AIIB has 57 countries predominantly in the Asia and Pacific region whereas NDB has five BRICS countries.
• Decision making in the NDB is more democratic, each member has one vote and decisions are taken by a simple voting method.
• Whereas voting shares in AIIB are based on the size of each member country’s economy (GDP in PPP terms) and not on the basis of a contribution to the bank’s authorised capital. China, India and Russia are the three largest shareholders.

In AIIB, China is the largest shareholder with 26.61 % voting shares in the bank followed by India (7.6%), Russia (6.01%) and Germany (4.2 %).