New Development Bank

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New Development Bank
Abbreviation NDB
Formation 15 July 2014 (2014-07-15)
Type International Financial Institutions
Legal status
Headquarters Shanghai, China
Membership  Brazil
 South Africa
Affiliations BRICS

The New Development Bank (NDB), formerly referred to as the BRICS Development Bank,[1] is multilateral development bank operated by the BRICS states (Brazil, Russia, India, China and South Africa) as an alternative to the existing World Bank and International Monetary Fund.[2] The Bank is setup to foster greater financial and development cooperation among the five emerging markets. It would be headquartered in Shanghai, China[3].


The New Development Bank was agreed to by BRICS leaders at the 5th BRICS summit held in Durban, South Africa on 27 March 2013.[2]

On 15 July 2014, the first day of the 6th BRICS summit held in Fortaleza, Brazil, the group of emerging economies signed the long-anticipated document to create the $100 billion BRICS Development Bank and a reserve currency pool worth over another $100 billion.[4] Both will counter the influence of Western-based lending institutions and the dollar. Documents on cooperation between BRICS export credit agencies and an agreement of cooperation on innovation were also signed.[5]

Shanghai was selected as the headquarters after competition from New Delhi and Johannesburg. An African regional center will be set up in Johannesburg.[6]

The first president will be from India,[7] [8] the inaugural Chairman of the Board of directors will come from Brazil [3] and the inaugural chairman of the Board of Governors will be Russian.[3]

Structure and Objectives[edit]

Development Capital[edit]

The bank's primary focus of lending will be infrastructure projects [9][10] with authorized lending of up to $34 billion annually.[10] South Africa will be the African Headquarters of the Bank named the, "New Development Bank Africa Regional Centre".[11] The bank will have starting capital of $50 billion, with capital increased to $100 billion over time.[12] Brazil, Russia, India, China and South Africa will initially contribute $10 billion each to bring the total to $50 billion.[12][11] Each member cannot increase its share of capital without all other 4 members agreeing. This was a primary requirement of India.[13][14] The bank will allow new members to join but the BRICS capital share cannot fall below 55%.[12]

Contingent Reserve Arrangement (CRA)[edit]

The objective of this reserve is to provide protection against global liquidity pressures.[9][15][12] This includes currency issues where members' national currencies are being adversely affected by global financial pressures.[9][15][12]

The Bank would also provide assistance to other countries suffering from the economic volatility in the wake of the United States' exit from its expansionary monetary policy.[16]

This fund will consist of $10 billion of "paid-in capital" ($2 billion from each member to be provided over seven years) and an additional $40 billion to be "paid upon request".[1] Out of the total initial capital of $100 billion, China will contribute $41 billion, Brazil, Russia and India would give $18 billion each, and South Africa would contribute $5 billion.[17] It is scheduled to start lending in 2016.[12]

Notes and references[edit]

  1. ^ a b "BRICS Bank to be headquartered in Shanghai, India to hold presidency". 16 July 2014
  2. ^ a b Powell, Anita. "BRICS Leaders Optimistic About New Development Bank". Voice of America. Retrieved 27 March 2013. 
  3. ^ a b c Lewis, Jeffrey; Trevisani, Paulo. "Brics Agree to Base Development Bank in Shanghai". The Wall Street Journal. Retrieved 16 July 2014. 
  4. ^ "Brics nations to create $100bn development bank". 15 July 2014
  5. ^ "BRICS establish $100bn bank and currency reserves to cut out Western dominance". 15 July 2014
  6. ^
  7. ^
  8. ^ "India Gets First Presidency Of The BRICS Bk". Bloomberg TV India. 
  9. ^ a b c "What the new bank of BRICS is all about". The Washington Post. 17 July 2014. Retrieved 20 July 2014. 
  10. ^ a b "New BRICS Bank a Building Block of Alternative World Order". The Huffington Post. 18 July 2014. Retrieved 20 July 2014. 
  11. ^ a b "BRICS countries launch $100 billion developmental bank, currency pool". Russia & India Report. 16 July 2014. Retrieved 20 July 2014. 
  12. ^ a b c d e f "BRICS Bank ready for launch - Russian Finance Minister". Russia & India Report. 10 July 2014. Retrieved 20 July 2014. 
  13. ^ "Indian media: Brics bank 'a step in right direction'". BBC. 16 July 2014. Retrieved 20 July 14. 
  14. ^ "Victory for Modi, India as BRICS summit clears setting up of a new development bank". India Today. 16 July 2014. Retrieved 20 July 2014. 
  15. ^ a b "BRICS currency fund to protect members from volatility - Russia’s top banker". Russia & India Report. 17 July 2014. Retrieved 20 July 2014. 
  16. ^ "BRICS bank to benefit developing countries: Brazilian president". IANS. Retrieved 15 July 2014. 
  17. ^ "BRICS Development bank top on Agenda of 6th BRICS Summit". IANS. Retrieved 15 July 2014. 

External links[edit]

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