New Development Bank (NDB)

BRICS built its own lender in 2014. It still gets confused with a completely different BRICS agreement, signed on the very same day.

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Indian Economy · IndEco0240

BRICS’s own lender, headquartered in Shanghai since 2015

15 Jul 2014

Agreement signed at Fortaleza

BRICS leaders sign the Agreement on the NDB, alongside a separate Contingent Reserve Arrangement.

Jul 2015

Agreement enters into force

It takes legal effect at the VII BRICS Summit, in Ufa, Russia.

Apr 2016

First loan approved

By year-end, 7 infrastructure projects are approved, worth over $1.5 billion.

2021 onward

Membership expands

Bangladesh, the UAE, and Uruguay join as new members, followed by Egypt.

Two agreements, one summit, different jobs

The NDB and the Contingent Reserve Arrangement were signed on the same day, in the same city. One finances infrastructure projects. The other is a $100 billion currency-swap safety net for balance-of-payments crises — structurally separate, though often confused.

📑 Contents

1Must Know
2Good to Know
3Test Yourself
4Great to Know
5Current Affairs
6Previous Year Questions

✊ Must Know

1. What the NDB is

Set Up By The New Development Bank (NDB) is BRICS’s own multilateral lender. It is not linked to APEC or any other grouping.
PYQ 2016 UPSC CSP 2016 (GS Paper I, Q67) directly tested this fact. A statement claiming NDB was “set up by APEC” is false.
Headquarters The NDB is headquartered in Shanghai, China.

2. When and where it was created

Signed The Agreement on the New Development Bank was signed on 15 July 2014. This happened at the VI BRICS Summit, in Fortaleza, Brazil.
Founders There are 5 founding members: Brazil, Russia, India, China, and South Africa.

3. Capital and purpose

Capital The NDB started with an authorised capital of $100 billion. Initial subscribed capital was $50 billion, split equally among the 5 founders.
Purpose Its purpose is financing infrastructure and sustainable development projects. This covers BRICS nations and other emerging economies.

4. Leadership

Current President Dilma Rousseff of Brazil is the current President of the NDB.
First President India’s K.V. Kamath was its first President.

📖 Good to Know

1. Entry into force and first loans

In Force The Agreement on the NDB entered into force in July 2015. This happened at the VII BRICS Summit, in Ufa, Russia.
First Loans The Bank approved its first loans in 2016. By year-end, 7 infrastructure projects were approved, worth over $1.5 billion.

2. Voting power

Basis Voting power at the NDB is tied to each member’s subscribed capital. It is not tied to population or GDP directly.
Equal Shares Each of the 5 founding members holds an equal 20% share.
BRICS Floor Even as new members join, BRICS nations must together keep at least 55% of total voting power. This is fixed under the Bank’s founding Agreement.

3. Local-currency lending and new members

Local Currency The NDB pushes local-currency lending. This cuts foreign-exchange risk for both itself and its borrowers. It has already issued bonds in Chinese yuan and South African rand.
Expansion Since 2021, the NDB has expanded beyond its 5 founders. It has admitted Bangladesh, the UAE, Uruguay, and Egypt as new members.

Test Yourself

🏆 Great to Know

1. NDB vs the Contingent Reserve Arrangement (CRA)

Same Summit The NDB and the CRA were both agreed at the same 2014 Fortaleza summit. They are often confused, but they are structurally separate.
Different Jobs The NDB finances individual projects. The CRA is instead a $100 billion currency-swap pool among BRICS central banks, for balance-of-payments support.
Commitments Under the CRA, individual commitments differ sharply by country. China committed $41 billion. Brazil, Russia, and India committed $18 billion each. South Africa committed $5 billion.

2. How the NDB fits with older institutions

Complementary The NDB is distinct from, and complementary to, older institutions like the World Bank Group and the Asian Development Bank. It is not a direct replacement for either.
Rupee Bond The NDB is planning its first-ever rupee-denominated bond in India. The funds would go toward domestic infrastructure, like railways, renewable energy, and ports.

📰 Current Affairs

1. NPS guidelines updated for NDB bonds

13 May 2026 The Pension Fund Regulatory and Development Authority (PFRDA) amended its NPS investment guidelines. This made NDB’s planned rupee-denominated bonds an eligible investment category, alongside existing eligible issuers like IBRD, IFC, and ADB.
Approval Trail The move follows in-principle approval from the Department of Economic Affairs, Ministry of Finance. (Source: PFRDA circular)

2. First rupee-denominated bond in the works

Announced 2025 The NDB is preparing to issue its first-ever rupee-denominated bond, in India’s domestic market. It aims to raise roughly $400-500 million, through 3-5 year bonds.
RBI Talks Talks with the Reserve Bank of India, for the needed approvals, are underway. (Source: Business Standard)

Previous Year Questions

UPSC CSP 2016, GS Paper I, Q67: “Consider the following statements: 1. New Development Bank has been set up by APEC. 2. The headquarters of New Development Bank is in Shanghai.” The first statement is false — the NDB was set up by BRICS, not APEC. The second statement is true. So only statement 2 is correct. Full question and answer: UPSC CSP 2016 — General Studies Paper I, Q67.

Related reading: IndEco0266 — Asian Development Bank (ADB), another multilateral development bank India is a founding member of.

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