The BRICS New Development Bank (NDB)

Context: Abdolnasser Hemmati, Governor of the Central Bank of Iran, announced that Iran is advancing toward official membership in the BRICS New Development Bank (NDB).

About The BRICS New Development Bank (NDB):

What It Is?

• The New Development Bank (NDB)—formerly called the BRICS Development Bank—is a multilateral development bank (MDB) established by the founding BRICS nations.
• Headquartered in Shanghai, China, it provides loans, equity participation, guarantees, and technical assistance to finance sustainable infrastructure and green development projects across emerging markets and developing countries (EMDCs).

History & Formation

• Proposal (2012): The idea for a South–South development bank was first mooted by India at the 4th BRICS Summit in New Delhi (2012).
• Formal Agreement (2014): Member nations signed the formal Agreement establishing the NDB on July 15, 2014, during the 6th BRICS Summit in Fortaleza, Brazil, accompanied by a $100 billion Contingent Reserve Arrangement (CRA).
• Operationalization (2015): The bank entered into force in July 2015, with India’s K. V. Kamath appointed as its first elected President.
• Regional Hubs: Established regional offices in Johannesburg (South Africa), São Paulo (Brazil), Moscow (Russia), and GIFT City, Gujarat (India).

Membership & Shareholding Architecture:

• Founding Members (Equal Voting): Brazil, Russia, India, China, and South Africa (each initially contributed an equal share of the $50 billion subscribed capital).
  • Unlike the Bretton Woods institutions, no single member possesses veto power, and each founding member exercises equal voting rights.
• Expanded Members: Open to all United Nations member states (with the rule that founding BRICS nations must retain at least 55% of total voting power). The bank has expanded to admit:
  • Bangladesh (admitted 2021)
  • United Arab Emirates (admitted 2021)
  • Egypt (admitted 2021/2023)
  • Algeria (admitted 2024)
  • Uzbekistan (admitted 2026)

Key Functions of the NDB:

• Financing Sustainable Infrastructure: Extends long-term sovereign and non-sovereign loans, equity financing, and credit guarantees to critical public works, including clean energy, transport networks, water management, and digital infrastructure.
• Promoting Local Currency Lending: Provides financing denominated in members’ domestic currencies to insulate emerging economies from foreign exchange volatility and global interest rate shocks.
• Green & Climate Financing: Prioritizes climate-resilient projects and issues green financial bonds to support renewable energy transitions and environmental social governance (ESG) standards.
• Emergency & Counter-Cyclical Relief: Operates emergency assistance facilities to offer counter-cyclical budgetary support to member economies facing severe macroeconomic shocks or public health emergencies.
• Technical & Project Advisory Assistance: Delivers technical assistance, feasibility studies, and institutional capacity-building support to accelerate project preparation in developing nations.