2014 · GS Paper 2 · Q19 · 12 marks
India has recently signed to become founding member of New Development Bank (NDB) and also the Asian Infrastructure Investment Bank (AIIB). How will the role of the two Banks be different ? Discuss the strategic significance of these two Banks for India.
In short
The NDB is a BRICS club of equal shareholders lending to emerging economies worldwide, while the AIIB is an open, capital-weighted Asian infrastructure bank in which China holds an effective veto. For India they bring infrastructure finance and voice, with India the AIIB's largest borrower and second-largest shareholder.
Model answer
Ghissu Editorial · Verified 4 Oct 2026 · 285 words
Ownership and voice
NDB capital is shared equally by the five founders with no veto, while AIIB votes follow capital, giving China over a quarter of votes and an effective veto on supermajority decisions.
Reach and membership
The NDB lends for infrastructure and sustainable development across emerging economies worldwide, with BRICS keeping at least 55% of votes, while the AIIB funds Asian infrastructure with 57 founding members, including the UK and Germany.
Infrastructure finance
India became the AIIB's largest borrower, and the NDB's first loans in 2016 included renewable energy lending through Canara Bank.
Voice and leadership
K.V. Kamath was the NDB's first president, and India is the AIIB's second-largest shareholder, a voice the IMF and World Bank still deny it.
Hedging China
Membership lets India shape AIIB norms and keep it apart from the Belt and Road Initiative, which India rejects over the corridor through Pakistan-occupied Kashmir, though India-China friction after Galwan (2020) limits its leverage.
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Question from the official UPSC Civil Services (Main) Examination 2014 paper. Answer written by Ghissu's engine and checked against our editorial standards. Found an error? Tell us and we correct it within 48 hours.