Day 1: BRICS bank starts its operations in China

The BRICS group of emerging economies launched its New Development Bank (NDB) in China on Tuesday. The bank will lend money to developing countries to help finance infrastructure projects, reported PTI.

The bank is backed by Brazil, Russia, India, China and South Africa - collectively known as BRICS countries.

The opening ceremony, held in a hotel in Shanghai, was attended by Chinese Finance Minister Lou Jiwei, Shanghai Mayor Yang Xiong and NDB's President K V Kamath.

Kamath, 67, will be the bank's president for the first five years.

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 ceremony.

BRICS economies launched the multi-billion dollar development bank at the 7th BRICS summit held in the Russian city of Ufa on July 8 amid efforts to finance infrastructure projects.

The NDB will have initial capital of $50 billion, which will be later increased to $100 billion within the next couple of years.

Each BRICS member will contribute an equal share in establishing a startup capital.

The bank was conceived as a counterbalance to Western-led financial institutions like the World Bank and the 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 gross domestic product size, according its officials.

The NDB is also backed by the China-floated $50 billion Asia Infrastructure Investment Bank (AIIB), which India and 56 other countries have joined.

The World Bank welcomed the opening of NDB. "We would like to congratulate K V Kamath, NDB president, 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.

(Image: Reuters)