PIB Backgrounder – BRICS Bank
7 things you need to know about the New Development Bank
1. The New Development Bank, formerly referred to as the BRICS Bank is a newly established multilateral development bank operated by Brazil, Russia, India, China and South Africa. The leaders of the five nations signed the document to create the $ 100 billion financial institution, along with $ 100 billion Contingent Reserve Arrangement at the 6th BRICS Summit at Fortaleza, Brazil on July 15, 2014
2. The main objective of the bank is to foster greater financial and development cooperation among the five emerging markets. New Development Bank will essentially play the role similar to that of the World Bank – funding long term physical and social infrastructure projects in emerging economies. The Contingent Reserve Arrangement will act more like the International Monetary Fund, helping countries mitigate short term currency crises, arising out of capital exodus.
3 .New Development Bank has been founded on the democratic principle – ‘one country, one vote’, which is at variance with the Brettonwood institutions.
4. New Development Bank will have an initial authorized capital of US$ 100 billion. The initial subscribed capital shall be of US$ 50 billion, equally shared among founding members. Each country will contribute $ 10 billion over the next seven years.
5. The Contingent Reserve Arrangement will have $100 billion fund with China committing $ 41 billion, $ 18 billion each by India, Russia and Brazil and $ 5 billion by South Africa.
6. New Development Bank will be headquartered in Shanghai and its first President will be nominated by India. Chairman of the Board of Directors will come from Brazil while the Chairman of the Board of Governors will be from Russia. South Africa will host the Africa Regional Centre.
7. New Development Bank is an idea originally conceived in India. It was first proposed in July 2009, in Durban, South Africa at the BRICS Summit. The Bank and the Fund will come into force after the respective legislatures of BRICS nations ratify their establishment.
PIB Mum /MD