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28-Mar-2024
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New Development Bank to Provide Loans to BRICS Member Nations 

     The recently formed International Financial Institution, New Development Bank, formed in July 2014 is likely to provide the very first batch of loans very soon. New Development Bank, formerly known as BRICS Development Bank is a multilateral development bank owned and operated by the BRICS states: Brazil, Russia, India, China and South Africa, parallel to the US and Europe-dominated World Bank and International Monetary Fund.

The first loans will be provided to the BRICS founding nations for the development of their renewable energy sectors, president KundapurVaman Kamath announced. The BRICS New Development Bank is also opening a regional centre in Johannesburg, South Africa in March 2016. The bank is also looking at local funding solutions such as tapping financial and capital markets in BRICS nations.

KV Kamath also added that more than half of the projects, both in number and value, are expected to be green, which is something that the Bank is doing consciously. He said that the response from various governments has been overwhelming in proposing such projects. NDB would include market borrowing to raise capital, but local currency will be favoured over hard currency when it comes to bonds.

According to a press release issued by the NDB, the initial capital has been set at $50 billion, and the total paid in capital would be $10 billion. Economic analysts point out that both the NDB and the AIDB (Asian Infrastructure Development Bank) are reshaping the financial global architecture, a field monopolized by other lender institutions.

The first investment by the bank will be issued in April, and the first loan will be issued in Yuan and not Dollar, the officials confirmed. Russian finance minister Anton Silunov who steered the NDB media interaction said that the institution will soon become a strong and well-respected international entity playing a leading role in the changing international financial architecture.

The BRICS nations contribute for about a quarter of the global economic output. With the launch of the New Development Bank, the heavy dependence on the US-dominated World Bank and the Japan-led Asian Development Bank will be reduced as well. The bank holds a goal of mobilizing resources for infrastructure and sustainable development projects in BRICS and other emerging economies and developing countries.

In another development, the government of the Indian state Telangana wants to secure a loan of Rs. 77,553 crores to fulfil its poll promise of transforming Hyderabad into a global city by creating infrastructure that is of international standards. The municipal administration and urban development department conducted a study and approximated the expenditure to be the aforementioned amount, but the government is hoping for approval from the Central government to mobilize such a huge figure.                                               - Joy  Philip