At BRICS, India must bank on the NDB

Source: The post “At BRICS, India must bank on the NDB” has been created based on “At BRICS, India must bank on the NDB” published in “The Hindu” on 14th September 2026.

UPSC Syllabus: GS-3- International Relations

Context: BRICS has expanded significantly in recent years. While its members accounted for 20% of global GDP and 11% of IMF voting share in 2011, the expanded grouping today represents nearly 40% of global GDP and 55% of the world’s population, without a comparable increase in IMF voting share.

Challenges within BRICS

1. Lack of Common Geopolitical Identity: Members differ on the nature of BRICS, with some favouring an anti-West orientation, while countries such as India, Brazil and South Africa prefer to view it as non-West rather than anti-West.
2. Risk of Strengthening China: India needs to maximise BRICS’ potential without strengthening Beijing’s overall strategic position.
3. Problem of De-dollarisation: India cannot fully support the Beijing-Moscow de-dollarisation push, particularly given the importance of India-U.S. relations and existing strains in bilateral ties.

New Development Bank as an Opportunity

1. Tangible BRICS Institution: The NDB, established in 2015, is one of BRICS’ most concrete economic instruments, created to finance infrastructure and sustainable development projects in emerging and developing economies.
2. Limited Scale of Operations: Despite a decade of existence, the NDB has approved only 139 projects worth around $43 billion, with only about $20 billion disbursed.
3. Comparison with AIIB: The Asian Infrastructure Investment Bank (AIIB) has 111 approved members and committed around $69 billion across 350 projects, supported by a AAA credit rating, showing the NDB’s relatively limited scale.
4. Importance for India: The NDB has already benefited India through commitments of nearly $10 billion across 32 projects, including metro systems and the Delhi-Ghaziabad-Meerut RRTS corridor.

Concerns Regarding the NDB

1. Capital Constraints: Increasing paid-up capital is difficult because some founding members, particularly Russia, face severe financial and geopolitical constraints.
2. Impact of Sanctions: Sanctions have affected the NDB’s credit standing and dollar funding costs. The bank has provided no new credit to Russia since March 2022 to protect its AA/AA+ credit rating.
3. Voting Structure: Equal voting shares among the founding members make capital expansion difficult, while new members can be admitted only if the founders’ collective voting share remains at least 55%.
4. Uneven Local-Currency Lending: Although the NDB has committed to increasing local-currency lending, such lending is heavily skewed towards the Renminbi, including the recent issuance of a ¥7 billion Panda bond.

Way Forward for India

1. Strengthen NDB Capital: India should push for greater capitalisation and membership expansion of the NDB to increase its lending capacity and reach more developing countries.
2. Promote Rupee Bond: India should push the NDB to complete its long-delayed rupee bond, with the bank already planning a rupee bond programme of around ₹25,000 crore over five years.
3. Expand Local-Currency Lending: India should promote wider use of member countries’ local currencies in NDB lending and borrowing. This can reduce dependence on the dollar without seeking to replace it as the principal currency for trade invoicing.
4. Diversify Local-Currency Financing: India should ensure that local-currency financing does not become excessively concentrated in the Renminbi, thereby maintaining greater balance within the NDB.
5. Make NDB Comparable to Other Multilateral Banks: The NDB should expand its operations to reach more emerging markets and developing countries, making it comparable with other major multilateral development lenders.

Conclusion: BRICS need not become an anti-Western bloc to remain relevant. By strengthening the NDB through greater capital, wider membership and diversified local-currency lending, India can promote development-oriented multilateralism while avoiding excessive dependence on either the dollar or Chinese-led financial mechanisms. This can help BRICS emerge as a more effective economic grouping without compromising India’s strategic autonomy.

Source: The Hindu