File picture: Flags of the BRICS nations
File picture: Flags of the BRICS nations | Photo Credit: Gil-Design

The New Development Bank (NDB) has put new transactions in Russia on hold in the light of unfolding uncertainties and restrictions.

This development comes in the wake of Russia invading Ukraine, leading to Western nations imposing sanctions on the former. Russia sees Ukraine’s move to be part of the European Union and NATO as a threat.

The sanctions include freezing the Russian central bank’s assets, banning people and businesses from dealing with Russia, and removing select banks from the SWIFT financial messaging system.

NDB was established in 2015 by BRICS countries -- Brazil, Russia, India, China and South Africa -- to mobilise resources for infrastructure and sustainable development projects in BRICS and other emerging economies. The multilateral development bank (MDB) has its headquarters at Shanghai.

BRICS countries have 19.42 per cent stake each in NDB. The MDB started expanding its membership in September 2021 with the admission of Bangladesh, the United Arab Emirates (UAE) and Uruguay. In December 2021, Egypt became the fourth new member to be admitted into NDB.

“The NDB applies sound banking principles in all its operations, as stated in its Articles of Agreement.

“...NDB will continue to conduct business in full conformity with the highest compliance standards as an international institution,” the Bank said in a statement.

As at December-end 2021, NDB had 77 investment projects in all member countries for a total approved amount of US$ 29.7bn

S&P Global Ratings, in its daily update on February 28, observed that the backlash against Russia’s invasion of Ukraine — in the form of sanctions, rapid divestment from Russian companies, and protests against the incursion in countries worldwide — are likely to affect financial and energy markets, borrowing conditions, and credit quality. 

 ”Over the weekend, the world’s major economies from the US to the EU to Japan united in sanctioning Russia’s central bank, aiming to freeze President Vladimir Putin’s personal assets, and removing some of the country’s major lenders from the Society for Worldwide Interbank Financial Telecommunications (SWIFT) messaging service,” S&P said.