At BRICS, India Must Bank on the New Development Bank

15 Sep 2026

Tags: International Relations   Groupings   Regional Agreements

Source: The Hindu

Context: When BRICS was formed in 2011, its five members accounted for around 20% of global Gross Domestic Product (GDP) but had only 11% of voting rights in the International Monetary Fund (IMF).

• With expansion, BRICS now represents nearly 40% of global GDP and 55% of the world's population, while its voting share in the IMF has increased only marginally.
• This reflects a broader BRICS demand for greater representation of emerging economies in global financial institutions.

Geopolitical Divergences within BRICS

• BRICS lacks a coherent geopolitical identity because members differ sharply in their approach towards the West.
• Russia, China and Iran favour positioning BRICS as an anti-Western platform, whereas India, Brazil and South Africa prefer to portray it as non-Western rather than anti-Western.
• Given the importance of India-U.S. relations, India cannot fully support a Beijing-Moscow-led campaign for rapid de-dollarisation.
• India's BRICS strategy therefore needs to maximise the grouping's economic potential without disproportionately strengthening China's strategic position.

New Development Bank: A Practical BRICS Instrument

• The New Development Bank (NDB) was established by BRICS in 2015 to mobilise resources for infrastructure and sustainable-development projects in BRICS and other emerging and developing economies.
• Unlike some broader BRICS initiatives, the NDB provides a concrete institutional mechanism through which the grouping can contribute to the global financial architecture.
• However, after a decade of operation, the NDB had approved only 139 projects worth about $43 billion, largely concentrated among its core members.
• The Asian Infrastructure Investment Bank (AIIB), established around the same period, had 111 approved members and committed around $69 billion across 350 projects, supported by a AAA credit rating.
• The NDB's relatively stagnant asset growth has constrained its lending capacity, while its disbursement remains slow, with only around $20 billion of approved loans actually disbursed according to the bank.

Breaking the NDB's Capital Bottleneck

• Increasing the paid-up capital of the founding members could strengthen the NDB's lending capacity, but domestic and geopolitical constraints make larger contributions difficult for some members.
• Russia's sanctions are particularly significant because they have affected the NDB's credit standing and increased its dollar funding costs.
• Despite Russia and China's advocacy of de-dollarisation, the NDB has provided no new credit to Russia since March 2022, partly to protect its AA/AA+ credit rating.
• Since the founding members have equal voting shares, the bank's capital expansion is constrained by the ability of its financially weaker members to contribute additional capital.
• The NDB has therefore opened membership to new countries to attract additional capital, although the founding members' combined voting share cannot fall below 55%.

Why the NDB Matters for India

• India has already benefited substantially from the NDB, which has committed nearly $10 billion across 32 projects, including metro systems and the Delhi-Ghaziabad-Meerut Regional Rapid Transit System (RRTS) corridor.
• India can use the NDB to expand infrastructure financing not only domestically but also across emerging markets and developing countries.
• Expanding the NDB's membership and geographical operations can increase BRICS' relevance without requiring it to become an explicitly anti-Western institution.

Local-Currency Financing: An Alternative to Dollar Dependence

• A major strength of the NDB is its emphasis on local-currency lending, which can reduce borrowers' exposure to foreign-exchange volatility.
• This is particularly useful for developing economies during periods of geopolitical conflict and economic instability.
• Local-currency financing can reduce excessive dependence on the U.S. dollar without requiring the dollar to be completely replaced as the dominant currency for international trade.
• The NDB's 2022–26 General Strategy targets 30% of its lending and borrowing in members' local currencies, although most transactions continue to be dollar-denominated.
• However, local-currency lending remains heavily concentrated in the Chinese renminbi, with the NDB recently pricing a ¥7 billion three-year Panda bond in China's interbank bond market.
• Issuance of such Panda bonds increased by approximately 91% year-on-year in 2026, according to Chinese data.

India’s Rupee Bond Opportunity

• India should push for the long-delayed NDB rupee bond, first discussed in 2016 and subsequently targeted for 2023 and March 2026.
• NDB President Dilma Rousseff described the issuance as being in its “final stage” in May 2026.
• The NDB had also launched a rupee bond programme aimed at mobilising around ₹25,000 crore over five years.
• Greater rupee-denominated borrowing and lending would diversify the NDB's local-currency portfolio, which is currently heavily tilted towards the renminbi.
• Since the 2026 New Delhi Declaration did not produce a significant agreement on mobilising the NDB, India should prioritise practical measures to overcome local-currency financing challenges during its future BRICS engagement.

NDB vs Other Multilateral Banks

• The NDB is a multilateral development bank focused on financing infrastructure and sustainable development in emerging and developing economies.
• Unlike the IMF, which primarily addresses macroeconomic and balance-of-payments stability, development banks primarily provide long-term financing for development projects.
• The NDB's expansion can strengthen the financial voice of the Global South while providing an alternative source of development finance.
• However, its effectiveness depends on adequate capitalisation, wider membership, stronger creditworthiness, faster disbursement and diversified local-currency financing.

Strategic Significance for BRICS

• BRICS possesses tangible economic institutions such as the NDB, giving it greater practical potential than a grouping based solely on political declarations.
• Strengthening the NDB can help BRICS contribute to reformed global financial governance without necessarily turning the grouping into an anti-Western bloc.
• For India, the NDB offers a way to pursue financial multipolarity and greater Global South representation while avoiding an unnecessarily confrontational approach towards the United States.
• In an increasingly fragmented international system, strengthening functional institutions such as the NDB could provide BRICS with a more sustainable and credible role in global governance.