BRICS Push for Currency Power as NDB Targets Rupee Bond Issue

The New Development Bank (NDB), established by the BRICS nations, is poised to issue its first rupee-denominated bonds in India: a move set to support local development while helping the Indian rupee gain a stronger position in the global financial system. 

Scheduled for launch at the end of this fiscal year, pending final approval from the Reserve Bank of India (RBI), the issuance is expected to raise between USD 400 million and USD 500 million with maturities ranging from three to five years. 

The NDB has previously issued bonds denominated in the Chinese yuan and South African rand, with its expansion into India’s domestic currency market signifies a continuation of the BRICS’ five-year strategy for at least 30% of its financing to be conducted in member-country currencies by 2026. This aims to reduce members’ dependence on the U.S. dollar while promoting greater international use of their national currencies.

Within India, rupee-denominated bonds are particularly significant. They enable the NDB to fund domestic infrastructure and sustainability projects using local currency, thereby mitigating exposure to exchange rate risks and supporting financial stability. It aligns closely with the country’s own policy objectives, including deepening domestic capital markets and advancing the internationalisation of the rupee.

The introduction of NDB rupee bonds will likely support rupee internationalisation by increasing the participation of both domestic and foreign investors in rupee-denominated instruments. As global investors acquire exposure to rupee assets, demand for the currency will strengthen, enhancing its liquidity and integration into international financial flows. This could, over time, bolster the rupee’s credibility in cross-border transactions, thus strengthening India’s role in global trade and reducing dependence on traditional reserve currencies.

The issuance is also expected to contribute to the diversification and maturation of India’s bond market, which remains heavily concentrated in government securities. The introduction of NDB instruments adds a new class of high-quality, non-sovereign securities that can serve as benchmarks for future issuances. This diversification is likely to enhance market liquidity, improve price discovery, and create new investment opportunities. The presence of a multilateral development bank as an issuer may also instill greater confidence among institutional investors, fostering deeper engagement by foreign participants in India’s debt markets.

These bonds also present an opportunity for investors to diversify their portfolios with a credible, internationally-backed product. The bank’s strong capital base and governance framework provide an additional layer of security compared to many domestic issuers. 

Nonetheless, certain risks remain, including currency fluctuations, interest rate movements, and evolving policy conditions. Despite this, the overall impact of such instruments is expected to be stabilizing, contributing to the long-term development of India’s financial markets.

The NDB’s plan to issue rupee-denominated bonds is more than a financial transaction - it is a strategic move toward economic resilience and currency empowerment. For India, the initiative enhances capital market depth, advances the global profile of the rupee, and facilitates sustainable development financing. For the broader BRICS framework, it reinforces progress toward a more balanced global financial system, in which emerging economies exercise greater agency over their development trajectories.