Objectives, aims and significance of New Development Bank (NDB) of BRICS

The BRICS NDB seeks to expand financial cooperation between the countries.

Countries do not always have sufficient resources to finance infrastructure projects and other programmes. The BRICS international Development Bank was created precisely to meet these challenges.

What is the BRICS New Development Bank?

The BRICS New Development Bank (NDB) is a financial institution focused on the development of the BRICS countries (Brazil, Russia, India, China, South Africa). The purpose of this institution is to finance projects that contribute to the growth of their economies and improve their well-being.

It was the first global bank to be established by emerging economies. The main task of this financial institution (BRICS NDB) is to reallocate resources to projects submitted by the member countries of the agreement.

When did the New Development Bank come into being?

The New Development Bank was established in 2014, during the sixth BRICS summit, held in Fortaleza, Brazil, the capital of the state of Ceara. Former Brazilian President Dilma Rousseff, Indian Prime Minister Narendra Modi, Russian President Vladimir Putin, Chinese President Xi Jinping and then South African President Jacob Zuma signed a document providing for the establishment of the bank. Its activities began in 2015.

What is the purpose of the BRICS NDB?

The BRICS Development Bank was created to help finance infrastructure development projects in emerging economies. The institution therefore operates as an alternative, perhaps more interesting in terms of interest rates, to the World Bank and the International Monetary Fund (IMF).

In addition, the institute seeks to increase financial cooperation among the signatory countries.

How does the New Development Bank work?

The development bank is structured by distributing equal shares among its founders, with each country having 20% of the total. Overall, the institution already has more than USD 100 billion in share capital and USD 50 billion in subscribed capital.

Although the BRICS countries have priority for participation, the NDB also accepts UN member states as members. However, some rules must be observed:

- the founding members must represent 55% of the bank;

- the proportion of non-borrower members must be below 20%;

- member countries, but not the founding members, should represent less than 7% of the organisation.

What is the significance of the New Development Bank?

The international Development Bank enjoys credibility in the market by helping to implement important major projects of its members.

The credit rating of the BRICS Bank is AAA according to the two Chinese rating agencies and AA+ according to Fitch and S&P. Dozens of projects with more than $10 billion in funding have already been approved in all member countries. These include the ecotourism infrastructure development project in the Indian state of Meghalaya, the SABESP investment programme, the Banco do Brasil sustainable financing project and others.

In addition, the bank has already established partnerships with institutions such as: AIIB, CAF, EBP, EDB, EIB, IIB, WBG.

The organisation has an official website of the BRICS development bank where more information can be found.