New Development Bank gets tax relief on Maharajah Bonds from 2026–27
The Ministry of Finance notified on 19 October that the BRICS-owned New Development Bank (NDB) does not need to deduct tax from resident or foreign institutional investors covered under two sections of the Income Tax Act, if they are holders of ‘Maharajah INR Bonds’ issued during 2026-27 and subsequent tax years. The Sections are related to nature of income and threshold taxation limits on such income.
The NDB is a multilateral development bank that is headquartered in Shanghai and established in 2015 by Brazil, Russia, India, China and South Africa. Conceptually similar to the World Bank, Asian Development Bank or European Investment Bank, the NDB aims to complement such efforts for global growth and development by mobilising resources for infrastructure and sustainable development projects in emerging markets and developing countries.
The Bank has since announced plans to raise ₹25,000 crore from India’s domestic market over five years by issuing Maharajah bonds so that it can onward lend those sums in local currency. The funds are stated to finance general corporate purposes, sustainable development and infrastructure, and green and social projects in India.
The Indian rupee-denominated Maharajah Bond will also reduce foreign exchange risks for the bank, help it achieve a target of providing 30 per cent of financing in local currencies across member countries, and strengthen India’s domestic capital markets.
“Granting NDB bonds preferential treatment would be a major catalyst. Key priority for the Bank is to receive zero-risk weight in local currency, as well as preferential tax and liquidity treatment,” said Roman Serov, the Bank’s vice-president and chief operating officer, at the First Finance Ministers and Central Bank Governors Meeting in Jaipur in August.
From an Indian government point of view, mobilisation of private capital is beneficial when fiscal space is limited and demands on public capital expenditure is increasing. Mobilising private capital is also a strategic imperative for NDB.
On 27 August regulator IRDAI permitted Indian insurance companies to invest in NDB’s bonds if the bonds fulfilled rating criteria for approved investments, and if the funds raised were invested in infrastructure ‘sub sectors’ that would qualify them as infrastructure investments.
Since its first non-founding members having entered in 2021 NDB’s membership base has risen to 10 countries, including Bangladesh, United Arab Emirates, Egypt, Algeria and Uzbekistan. Prospective members are listed as Uruguay, Columbia, Ethiopia, Angola, Zimbabwe and Belarus.
“India is the second-largest recipient of NDB’s financing with 35 approved infrastructure projects amounting to total $10.5 billion, which represents 24 per cent of the NDB loan portfolio,” said Serov. “We have successfully disbursed around $6 billion in India, demonstrating our commitment to turning approvals into tangible, on-the-ground impact.”
Within 2026, some Indian projects partly funded by the Bank include a ReNew Peak Power Renewable Energy Project hybrid plant and the National Bank for Financing Infrastructure and Development to onward finance clean energy projects. NDB has earlier approved two equity investments of $100-million equivalent each for the National Investment and Infrastructure Fund of Funds.