annual-meeting-of-board-of-governors-of-new-development-bank-summary

Context: Recently, the Union Minister of Finance attended the 5th Annual Meeting of the Board of Governors of New Development Bank(NDB) through video-conference.

Background:

  • The NDB was established by the BRICS countries (Brazil, Russia, India, China and South Africa) in 2014
  • During the sixth BRICS Summit in Fortaleza (2014), the leaders signed the Agreement establishing the New Development Bank (NDB).
  • The purpose of the Bank is 
    • To mobilise resources for infrastructure and sustainable development projects in BRICS and other emerging market economies and developing countries.
    • To complement the existing efforts of multilateral and regional financial institutions for global growth and development. 
  • NDB has so far approved 14 projects in India for an amount of $ 4,183 million.

India at the meeting:

  • In the opening remarks at the meeting, the Finance Minister commended the NDB’s efforts in establishing itself as a credible Global Financial Institution, delivering its mandate successfully by taking a more sustainable and inclusive approach.
  • On the discussion of COVID-19, the FM appreciated NDB’s effort on fast tracking of financial assistance of about $5 billion to BRICS countries including Emergency Assistance of $1 billion India to combat COVID-19 pandemic. 
  • India suggested that assistance under this facility be enhanced to $10 billion. 
  • The FM also highlighted India’s initiative of creating a COVID-19 Emergency Fund and India’s efforts in supplying critical medicine to the needy countries to tackle the COVID-19. 

The Finance Minister of Brazil thanked India for the timely help it received from India in the form of critical drugs.

Various measures taken by India in its fight against COVID-19:

  • allocation of $2 Billion (Rs 15,000 crore) by the Government of India for strengthening the healthcare system; 
  • announcement of a scheme of social support measures amounting to $25 Billion to alleviate the hardship of the poor and the vulnerable; 
  • insurance cover of $67,000 (Rs 50 lakh) per person to over 2.2 million frontline health workers and others provision of relief to firms in statutory and regulatory compliance matters; 
  • easing of monetary policy by the RBI.

India strongly encouraged NDB to take appropriate actions to join the G-20 forum along with other Multilateral Development Banks (MDBs) or International Financial Institutions (IFIs). NDB needs to follow innovative practices in supporting the BRICS nations for achieving their Sustainable Development Goals.

 

New Development Bank

 

Idea: At the fourth BRICS Summit in New Delhi (2012), the leaders of Brazil, Russia, India, China and South Africa considered the possibility of setting up a new Development Bank to mobilize resources for infrastructure and sustainable development projects in BRICS and other emerging economies, as well as in developing countries. 

Agreement: Following the report from the Finance Ministers at the fifth BRICS summit in Durban (2013), the leaders agreed on the feasibility of establishing the New Development Bank and made the decision to do so.

Origin: During the sixth BRICS Summit in Fortaleza (2014), the leaders signed the Agreement establishing the New Development Bank (NDB).

The Bank formally came into existence as a legal entity at the inaugural meeting of the Board of Governors of the NDB chaired by Russia and held on the eve of the Ufa Summit in 2015. 

During the meeting, the appointment of the President, Mr. K.V. Kamath(Current President), as well as four Vice Presidents and the Board of Directors took place.

The NDB became fully operational at the signing of the Headquarters Agreement with the government of the People’s Republic of China in 2016. HQ - Shanghai

Objectives: In the Fortaleza Declaration, the leaders stressed that 

  • the NDB will strengthen cooperation among BRICS and 
  • will supplement the efforts of multilateral and regional financial institutions for global development, thus
  • contributing to collective commitments for achieving the goal of strong, sustainable and balanced growth.

Capital: The authorized capital for NDB is $100 Billion while initial subscribed capital is $50 billion. Initial subscribed capital was equally distributed among the founding members {$10 billion each}. 

Voting power of each member is equal to the number of its subscribed shares in capital stock.

Image Source: ndb.int