Consider the following statements: 1. New Development Bank has been set up by APEC. 2. The headquarters of New Development Bank is in Shanghai. Which of the statements given above is/are correct?
Contents13
- A1 only
- B2 only
- CBoth 1 and 2
- DNeither 1 nor 2
Show answer
Answer: (B) 2 only
Answer: (b) 2 only
Statement 1 is INCORRECT: The New Development Bank (NDB) was NOT set up by APEC (Asia-Pacific Economic Cooperation). It was set up by BRICS — the group of five emerging economies: Brazil, Russia, India, China, and South Africa. The NDB was established in 2014 at the Fortaleza Summit in Brazil.
Statement 2 is CORRECT: The headquarters of the NDB is in Shanghai, China.
Key facts about the NDB:
- Initial authorized capital: $100 billion
- Initial subscribed capital: $50 billion (each BRICS country contributed $10 billion equally)
- First President: K.V. Kamath (India)
- Unlike the World Bank where voting power is based on capital share, in NDB each country has ONE vote and NO country has veto power — making it more democratic
- Purpose: to fund infrastructure and sustainable development projects in BRICS and other emerging/developing countries
- It was created partly as an alternative to Western-dominated institutions like the World Bank and IMF
Don't confuse NDB with:
- AIIB (Asian Infrastructure Investment Bank) — led by China, has many members
- World Bank/IMF — Bretton Woods institutions dominated by Western nations
Only statement 2 is correct. The answer is (b) "2 only".
The New Development Bank represents BRICS countries creating their own multilateral financial institution as an alternative to Western-dominated World Bank and IMF.
UPSC frequently tests students on whether they can distinguish between similar-sounding international organizations like NDB (BRICS), AIIB (China-led), and APEC (Asia-Pacific forum).
New Development Bank (NDB)
Indian Economy New Development Bank
New Development Bank: BRICS Alternative to World Bank
NDB established by BRICS (not APEC) in 2014, headquarters in Shanghai
Initial capital: $100 billion authorized, $50 billion subscribed ($10 billion per country)
Equal voting power for all members, no veto (unlike World Bank)
First President: K.V. Kamath from India
The New Development Bank is a multilateral development bank created by BRICS countries (Brazil, Russia, India, China, South Africa) as an alternative to Western-dominated institutions like the World Bank and IMF. Established at the Fortaleza Summit in 2014, it began operations in 2016.
NDB vs World Bank Structure
Aspect | New Development Bank | World Bank |
|---|---|---|
Founders | BRICS (5 countries) | Bretton Woods (Western-led) |
Voting Power | Equal (1 vote per country) | Capital-based (US dominates) |
Veto Power | No country has veto | US has effective veto |
Headquarters | Shanghai, China | Washington DC, USA |
Focus | Infrastructure & sustainable development | Broader development projects |
Key Features & Operations
Purpose: Fund infrastructure and sustainable development projects in BRICS and other emerging/developing countries
Democratic structure: Each BRICS country has equal say regardless of economic size
Regional offices: Africa (South Africa), Americas (Brazil), Europe (Russia)
Question Context
This PYQ tested the common confusion between BRICS institutions (NDB) and APEC — a completely different Asia-Pacific trade forum. The trap was mixing up which multilateral organization created the NDB.
Trap: Confusing NDB founder — it's BRICS, not APEC or any other group
Trap: Mixing up headquarters — NDB is Shanghai, AIIB is Beijing
Trap: Confusing NDB with AIIB (Asian Infrastructure Investment Bank) — different institutions with different members
APEC (Asia-Pacific Economic Cooperation)
World Affairs (International Relations) APEC
APEC: Asia-Pacific Trade & Economic Forum
APEC = Asia-Pacific Economic Cooperation, established 1989
21 member economies including USA, China, Japan, India (not member)
Focus: trade liberalization and economic cooperation, not development banking
APEC is a regional economic forum focusing on trade liberalization and economic cooperation in the Asia-Pacific region. Unlike BRICS, it does NOT create development banks or financial institutions — it's a dialogue platform for reducing trade barriers.
APEC Key Members & Details
Aspect | Details |
|---|---|
Established | 1989 in Canberra, Australia |
Members | 21 economies (called economies, not countries) |
Major Members | USA, China, Japan, Russia, Australia, Canada |
Notable Absence | India is NOT a member |
Secretariat | Singapore |
Annual Event | APEC Economic Leaders' Meeting (summit) |
APEC Functions
Trade liberalization: Reducing tariffs and trade barriers in Asia-Pacific
Economic dialogue: Annual summits and ministerial meetings
Capacity building: Technical cooperation and policy coordination
Trap: APEC does NOT create banks — it's a trade forum, not a financial institution creator
Trap: India is NOT an APEC member (despite being Asia-Pacific region)
Trap: Don't confuse with ASEAN — different membership and scope
BRICS & Its Institutions
World Affairs (International Relations) BRICS
BRICS: Emerging Economies & Their Institutions
BRICS = Brazil, Russia, India, China, South Africa (joined 2010)
Two main institutions: New Development Bank (Shanghai) & Contingent Reserve Arrangement
Annual summits since 2009, focused on South-South cooperation
BRICS represents five major emerging economies that created alternative institutions to challenge Western-dominated global financial architecture. The group evolved from BRIC (2009) to BRICS when South Africa joined in 2010.
BRICS Institutions
# BRICS Institutions
## New Development Bank
- $100B authorized capital
- Shanghai HQ
- Infrastructure focus
- Equal voting
## Contingent Reserve Arrangement
- $100B emergency fund
- Currency crisis support
- IMF alternative
## Other Initiatives
- BRICS Payment System
- Energy cooperation
- Technology partnershipsBRICS Members & Contributions
Country | NDB Contribution | CRA Contribution | Key Role |
|---|---|---|---|
Brazil | $10 billion | $18 billion | Latin America gateway |
Russia | $10 billion | $18 billion | Energy & resources |
India | $10 billion | $18 billion | IT & services |
China | $10 billion | $41 billion | Manufacturing & largest economy |
South Africa | $10 billion | $5 billion | Africa gateway |
Trap: South Africa joined 2010 — group was BRIC before that
Trap: Don't confuse BRICS with BASIC (climate negotiation group)
Trap: China contributes more to CRA ($41B) but equal to NDB ($10B)
Alternative Development Banks
Indian Economy
Alternative Development Banks: NDB, AIIB & Others
Three major alternatives to World Bank: NDB (BRICS), AIIB (China-led), EDB (Eurasian)
AIIB has 100+ members including UK, Germany; NDB only 5 members
All focus on infrastructure financing in developing countries
Several alternative development banks emerged in 2010s as emerging economies sought alternatives to Western-dominated World Bank and ADB. Each has different membership, focus, and governance structures.
Major Alternative Development Banks
Bank | Founded By | Members | Headquarters | Capital | Key Feature |
|---|---|---|---|---|---|
New Development Bank | BRICS | 5 countries | Shanghai | $100B | Equal voting |
AIIB | China | 100+ countries | Beijing | $100B | China dominates |
Eurasian Development Bank | Russia/Kazakhstan | 6 countries | Almaty | $7B | Post-Soviet focus |
Islamic Development Bank | OIC | 57 countries | Jeddah | $150B | Sharia-compliant |
India's Membership Status
NDB: Founding member with equal voting power and 20% stake
AIIB: Founding member, second-largest shareholder after China
World Bank & ADB: Long-standing member but limited influence
Trap: AIIB headquarters is Beijing, NDB is Shanghai — different Chinese cities
Trap: AIIB has 100+ members, NDB has only 5 members (very different scale)
Trap: Don't confuse Islamic Development Bank (older, 1975) with these recent alternatives