New Development Bank
New Development Bank (NDB) has been established by the BRICS countries to provide financial support to public and private projects via loans, guarantees, equity participation etc. This Shanghai based bank is currently headed by K V Kamath.
The logo of the New Development Bank is inspired by Mobius loop / stripwhich symbolizes the idea of continuous transformation.
Capital, Members, Logo and Brand
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.
The bank has defined its brand identity as an eco-friendly lender. By end of its one year, it has funded five projects each of its members, all related to renewable energy. Further, in July 2016, the bank has also issued its first Green Financial Bond 3 billion Yuan in the Chinese Interbank Bond Market. The banks focuses on raising funds from local markets of the BRICS countries and use the monies for infrastructure and sustainable development projects in the BRICS countries.
Challenges for New Development Bank
New Development Bank is just an year old MDB {Multilateral Development Bank} and it is still in nascent stage of funding. Since its scope of funding is in infrastructure projects, such projects need huge amounts of funds, which is a challenging task. Secondly, the NDB has only five members as of now and its activities are limited to these five countries only. To expand its business, it needs to include other members as well. Thirdly, so far it has only funded the public projects. It needs to learn to fund the private projects as well and such funding is full with challenges. Gradually, NDB needs to learn the efficiency of processing and implementing projects, needs to implement stringent environmental standards to maintain its brand.
How NDB is different from AIIB?
Like New Development Bank, Asian Infrastructure Investment Bank (AIIB) is also a multilateral Development Bank and both have the same objective i.e. to provide an alternative to west dominated World Bank and IMF. However, there are two fundamental differences between the two. Firstly, while members of AIIB are 57 countries predominantly of Asia and Pacific region; NDB has five BRICS countries has members. Secondly, the largest shareholders in AIIB are China and India with 30.34% and 8.52% share respectively. These two countries have voting share of 26.06 and 7.5% respectively. Since China itself has more than 25% voting share, it is going to dominate the veto power in the decisions of the bank. On the other hand, decision making in the NDB is more democratic. Each member has one vote and decisions are taken by simple voting method.
