Question map
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?
Explanation
The correct answer is option B - statement 2 only is correct.
The New Development Bank (NDB) was established by the BRICS countries (Brazil, Russia, India, China, and South Africa), not by APEC[2]. Therefore, statement 1 is incorrect.
The New Development Bank was established in 2015 with its headquarters in Shanghai[3]. The headquarters of NDB is located at Shanghai, China[4]. Therefore, statement 2 is correct.
The main functions of NDB are to support infrastructure and sustainable development projects through loans, guarantees, equity and other financial instruments, and to provide technical assistance[4]. Since only statement 2 is correct, the answer is option B.
Sources- [1] https://abhipedia.abhimanu.com/Article/IAS/MzE2MTYEEQQVV/Consider-the-following-statements-1--New-Development-Bank-has-been-set-up-by-APEC-2-nb-Economic-Affairs
- [3] Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 13: International Organizations > 13.16 New Development Bank (NDB)/ BRICS Bank > p. 401
- [4] Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 18: International Economic Institutions > NEW DEVELOPMENT BANK OR BRICS DEVELOPMENT BANK > p. 529
PROVENANCE & STUDY PATTERN
Full viewThis is a classic 'Sitter' question derived directly from major headlines of the time (BRICS Summits) and standard Economy textbooks. The trap is a simple 'Entity Swap'βattributing a BRICS initiative to APEC. If you track major International Organizations, this is free marks.
This question can be broken into the following sub-statements. Tap a statement sentence to jump into its detailed analysis.
- Explicitly states which organization established the New Development Bank and denies APEC's role.
- Directly refutes the claim by naming the founding members (BRICS) and saying 'not by APEC'.
- States the NDB 'is a multilateral development bank established in 2015 by Brazil, Russia, India, China, and South Africa'.
- Identifies the BRICS founders, which contradicts the statement that APEC established the bank.
States that BRICS nations proposed to set up a Multilateral Development Bank and motivated the need for the New Development Bank (NDB).
A student could infer NDB was a BRICS initiative (not APEC) and check membership/founding declarations of BRICS vs APEC to test the statement.
Gives the NDB's establishment year (2015) and headquarters (Shanghai), providing concrete identity and timing for the bank.
Compare the 2015 founding and location with APEC's scope and activities (a forum) or with lists of organizations that created banks to assess plausibility.
Defines APEC as a regional economic forum of 21 Pacific Rim countries established in 1989 and headquartered in Singapore.
Use this to note APEC's nature (a forum of specific members) and then check whether APEC historically establishes multilateral development banks or whether its members overlap with NDB founders.
Explains that international economic institutions are established by the solidarity of several countries and gives the Bretton Woods conference as an example of founding mechanism.
Apply this pattern to ask which grouping (e.g., BRICS, APEC, or a conference) acted collectively in 2015 to found the NDB, then verify which grouping made such a founding decision.
Describes the creation in 2016 of another Asia-focused multilateral bank (AIIB) proposed by China, showing that regional banks are often founded by specific country groupings rather than by APEC itself.
Use this example to infer that multilateral banks in Asia tend to be initiated by particular countries/alliances (e.g., China, BRICS) and check whether APEC has a precedent of founding such banks.
- Explicitly states the New Development Bank was established in 2015 with its headquarter in Shanghai.
- Direct assertion of Shanghai as the bank's headquarters is unambiguous and on-topic.
- Explicit line: 'Headquarters of NDB is located at Shanghai, China.'
- Provides corroborating detail about the NDB alongside its functions, reinforcing the HQ location claim.
- [THE VERDICT]: Sitter. Covered in every standard Economy text (Singhania Ch. 18, Vivek Singh Ch. 13) and 2015-16 Current Affairs.
- [THE CONCEPTUAL TRIGGER]: International Economic Institutions & The 'Global South' Challenge to Bretton Woods (IMF/WB).
- [THE HORIZONTAL EXPANSION]: Memorize the 'Asian Bank Trinity': AIIB (Beijing, China-led), ADB (Manila, Japan/US-led), NDB (Shanghai, BRICS-led). Also note APEC's HQ (Singapore) and SCO's HQ (Beijing).
- [THE STRATEGIC METACOGNITION]: Do not read institutions in isolation. Create a comparative table: [Name | Founded By | HQ Location | Voting Structure]. UPSC loves swapping HQs (Shanghai vs Beijing) and Founders (APEC vs BRICS).
References identify the NDB's creation context (established 2015) and link its origin to BRICS proposals rather than APEC.
UPSC often asks which international group established which institution (e.g., BRICS, APEC, ASEAN). Mastering the founders/origins helps eliminate distractors in matching/MCQ and mains answers. Prepare by compiling a list of major multilateral banks and their sponsoring groups with dates and purposes.
- Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 13: International Organizations > 13.16 New Development Bank (NDB)/ BRICS Bank > p. 401
- Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 18: International Economic Institutions > NEW DEVELOPMENT BANK OR BRICS DEVELOPMENT BANK > p. 528
APEC is described as a regional economic forum, while other references describe institutions (NDB, AIIB, ADB) that are development banks with distinct mandates.
Questions test the functional difference (forum vs bank) and institutional roles; knowing these distinctions helps answer 'who established/hosts/finances' style questions and linkage to trade vs finance. Study by mapping organizations by type (forum, bank, fund) and their core functions.
- Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 18: International Economic Institutions > Asia-Pacific Economic Cooperation (APEC) > p. 550
- Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 13: International Organizations > 13.16 New Development Bank (NDB)/ BRICS Bank > p. 401
- Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 13: International Organizations > 13.15 Asian Infrastructure and Investment Bank (AIIB) > p. 400
References give establishment years and HQs for NDB (2015, Shanghai), AIIB (2016, Beijing) and ADB (1966, Mandaluyong).
Static facts (year, HQ) are high-yield for prelims and helpful in mains for concise introductions. Create a tabulated revision sheet of multilateral banks with year, HQ, sponsoring group and primary mandate for quick recall.
- Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 13: International Organizations > 13.16 New Development Bank (NDB)/ BRICS Bank > p. 401
- Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 13: International Organizations > 13.15 Asian Infrastructure and Investment Bank (AIIB) > p. 400
- Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 18: International Economic Institutions > ASIAN DEVELOPMENT BANK > p. 530
Both references directly identify the NDB's establishment and state its headquarters is in Shanghai.
High-yield factual detail for polity/economy sections and static GK questions; helps answer questions on BRICS institutions and placement of international financial bodies. Learn by mapping major multilateral banks to their founding dates and HQ cities to quickly eliminate options in MCQs.
- Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 13: International Organizations > 13.16 New Development Bank (NDB)/ BRICS Bank > p. 401
- Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 18: International Economic Institutions > NEW DEVELOPMENT BANK OR BRICS DEVELOPMENT BANK > p. 529
The references include NDB's HQ (Shanghai) and another Asian MDB (AIIB) explicitly headquartered in Beijing, highlighting that different regional MDBs are based in different Chinese cities.
Useful for comparative questions on international institutions and geopolitics (e.g., BRICS vs China-initiated banks). Master by creating a tabular list of major MDBs, their purposes, and HQs; this supports elimination-style MCQs and short-notes answers.
- Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 18: International Economic Institutions > NEW DEVELOPMENT BANK OR BRICS DEVELOPMENT BANK > p. 529
- Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 13: International Organizations > 13.15 Asian Infrastructure and Investment Bank (AIIB) > p. 400
A reference lists NDB's main functions and sectors it finances, linking institutional purpose with its identity.
Understanding what an institution does (not just where it's headquartered) is frequently tested in prelims and mains; prepares candidates for questions on development finance, infrastructure funding, and comparative roles of MDBs. Study by summarizing each institution's mandate and typical sectors financed.
- Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 18: International Economic Institutions > NEW DEVELOPMENT BANK OR BRICS DEVELOPMENT BANK > p. 529
The 'Voting Power' nuance: Unlike the World Bank or IMF (where voting is based on shareholding), the NDB was founded on the principle of 'One Member, One Vote' among the founding BRICS nations. This democratic structure is its unique selling point.
The 'Nickname' Heuristic: In news, NDB was universally referred to as the 'BRICS Bank'. If you recall this common moniker, Statement 1 (APEC) is instantly eliminated. Furthermore, APEC is a 'Forum' (talk shop), not a financial entity with capital to start a bank.
Mains GS-2 (Global Groupings): NDB and AIIB are concrete examples of 'Reforming Global Governance' and the shift of economic gravity from the Atlantic (US/EU) to the Indo-Pacific. Use this to argue how the Global South is building alternatives to the 'Washington Consensus'.