Shanghai: A new $100 billion bank floated by BRICS nations, including India, as an alternative to the World Bank and IMF to boost infrastructure funding in the emerging economies and offer them tailor-made services was launched in Shanghai on Tuesday.
The opening ceremony of the New Development Bank (NDB) was held here in China's financial capital. Chinese Finance Minister Lou Jiwei, Shanghai Mayor Yang Xiong and the bank's President K V Kamath attended the opening ceremony.
Kamath, 67, who will be the bank's President for the first five years, said he was confident of delivering on people's expectation of the new bank.
"Countries should closely cooperate," Kamath, a former executive with India's largest private bank ICICI Bank, said. "We will listen carefully to our members and try to offer tailor-made services for them," he said.
BRICS economies — Brazil, Russia, India, China and South Africa — launched the multi-billion dollar development bank at the 7th BRICS summit held in the Russian city of Ufa on 8 July amid efforts to finance infrastructure projects, mainly in member countries.
"The NDB will supplement the existing international financial system in a healthy way and explore innovations in governance models," Lou said at a seminar following the launch of the bank.
"Its creation is to meet the urgent demand of such countries in infrastructure construction and beyond," he said, adding it will complement the existing international banking system, instead of challenging it.
The NDB will have initial capital of $50 billion, which will be expanded to $100 billion within the next couple of years.
Each BRICS member will contribute an equal share in establishing a startup capital.
BRICS nations, with 42.6 per cent of the world's total population and roughly one third of the world's land area, have a combined GDP accounting for about one fifth of the world total.
The NDB was conceived as a counterbalance to US-led financial institutions like the World Bank and IMF by providing funding for infrastructure and development projects in BRICS countries. Each nation will have an equal say in the bank's management, regardless of GDP size, according its officials.
The NDB is also backed by the China-floated $50 billion Asia Infrastructure Investment Bank (AIIB) in which India and 56 other countries have joined.
The World Bank welcomed the opening of NDB.
"We would like to congratulate Mr K V Kamath, President of the New Development Bank, and the founding members — Brazil, Russia, India, China, and South Africa — on this important occasion," World Bank President Jim Yong Kim said in a statement.
"We are committed to working closely with the New Development Bank and other multilateral institutions, offering to share our knowledge and to co-finance infrastructure projects. These types of partnerships will be essential to reach our common goals to end extreme poverty by 2030, boost shared prosperity, and to reduce inequalities," Kim said.
Updated Date: Jul 21, 2015 16:14 PM