The New Development Bank is previously mentioned as the BRICS Development Bank by the BRICS states, Brazil, Russia, India, China and South Africa. It is a multilateral development bank that supports private and public projects through loans, financial instruments, equity participation and guarantees.
Additionally, the New Development Bank shall collaborate with financial entities and international organizations and deliver mechanical support for plans to be supported by the bank. The New Development Bank headquarters is in Shanghai, China and regional office are in Johannesburg, South Africa.
In 2012, the 4th BRICS summit was held in Delhi at which India suggested the inkling of setting up the bank. The central theme of the conference was the creation of a new development bank. On 27th March 2013, at 5th BRICS summit held in Durban, South Africa, the BRICS leaders decided to set up a development bank.
On 15th July 2015, 6th BRICS summit was held in Fortaleza, Brazil, on 1st day the BRICS states signed on the agreement of New Development Bank, which makes provisions for the legal basis on the bank. On 11th May 2015, K. V. Kamath was appointed as 1st President of the New Development Bank. The New Development Bank Board of Governors 1st meeting was held in Shanghai on 20th July 2016 to discuss future development and work of the bank.
In 2016, the New Development Bank Board of Directors approved the setup of the 1st project. The New Development Bank signed the 1st loan agreement on 21st December 2016. In August 2018 the bank received A++ credit rating from Fitch Ratings and S&P Global Ratings which empowers the bank to offer a full suite of financial products to its private and public sector clients.
The opening authorized capital of New Development Bank is $100 million divided into 1 million shares while primary subscribed capital is $50 billion divided into callable shares $40 billion, and paid-in shares $10 billion. The primary subscribed money of the New Development Bank was equally dispersed amongst the establishing members. The New Development Bank agreement states that polling power of each state will be equivalent to its contributed capital in the capital stock of the bank.
According to media reports, a multilateral development institution, the World Bank Group have articulated an intention to work together with the New Development Bank. The World Bank Group and New Development Bank signed a memorandum of understanding on cooperation in September 2016. It was announced that the World Bank Group and the New Development Bank would work together to focus mainly on infrastructure.
Some experts guess that the New Development Bank and the Asian Infrastructure Investment Bank would compete with one another. Still, according to the bank’s representatives, both are sister institutions in many respects. Both the banks have different geographic focuses as New Development Bank only focused on BRICS states.