BRICS New Development Bank launched in Shanghai
Shanghai - The New Development Bank (NDB) opened in Shanghai on Tuesday to finance infrastructure projects, mainly in BRICS countries.
BRICS countries are the world's major emerging economies: Brazil, Russia, India, China and South Africa.
BRICS leaders signed an agreement to establish the bank during their sixth summit in Brazil in July, 2014. The bank will start operations at the end of this year or early in 2016.
Chinese Finance Minister Lou Jiwei, Shanghai Mayor Yang Xiong and NDB President K.V. Kamath from India attended the opening ceremony.
The NDB will supplement the existing international financial system in a healthy way and explore innovations in governance models, Minister Lou said at a seminar following the ceremony.
Jim Yong Kim, President of the World Bank Group, said in a statement the NDB joins a growing number of multilateral institutions that are working to address the world's huge infrastructure needs.
“Emerging markets and low-income countries face an annual gap of US$ 1 trillion to US$1.5 trillion in infrastructure spending.
"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."
The NDB will have an initial authorised capital of US$100 billion, and initial subscribed capital of US$50 billion "equally shared" among the five founders.
Equal shares among the five members will ensure equal dialogue and serve as a model for innovation to global governance, said Xu Xiujun, a researcher with the Institute of World Economy and Politics of the Chinese Academy of Social Sciences.
The five BRICS countries are home to 42.6 percent of the global population, 21 percent of the world's economy and nearly half of the world's forex reserves, but have been marginalized in the global financial landscape.
Demand for new infrastructure is climbing across the world, but some rich countries are increasingly hesitant to lend, said Shen Yi, an expert on BRICS countries with the Fudan University, in Shanghai.
Zha Xiaogang, an analyst with the Shanghai Institute for International Studies, said through improved infrastructure the NDB can make the sustainable growth of developing countries a reality, and China can share its experience, infrastructure production capacity and funds with other members.
The first chair of the board of governors will be from Russia, the first chair of the directors from Brazil, and the first president from India.
The bank was formerly set up at a meeting in Russia on 7 July this year with Kamath chosen as president.
Kamath is credited with turning ICICI Bank - an Indian multinational banking and financial services company - into one of India's largest private lenders during his 13 years as managing director and CEO.
He spent several years at the Asian Development Bank and has served as non-executive chairman of both ICICI and Indian software giant Infosys.