New Development Bank (BRICS Bank) :

• New Development Bank or the BRICS Development Bank is a multilateral development bank operated by the BRICS states.

• Aims to mobilize resources for infrastructure and sustainable development projects in BRICS and other emerging economies and developing countries.

• Headquartered at Shanghai with African Regional Centre at Johannesburg.

An alternative to the existing :

• World Bank & International Monetary Fund.

Origin:

• Idea for setting up NDB – 4th BRICS summit 2012, Delhi.

• Leaders agreed to set up NDB – 5th BRICS summit 2013, Durban, South Africa.

• 6th BRICS summit held in Fortaleza, Brazil, 2014, signed the document for $100 billion BRICS Development Bank and a reserve currency pool worth over another $100 billion.

Terms & Objectives:

• Primary focus of lending will be infrastructure projects with authorized lending of up to $34 billion annually.

• Will have starting capital of $50 billion, with capital increased to $100 billion over time.

• Brazil, Russia, India, China & South Africa will initially contribute $10 billion each to bring the total to $50 billion.

• No member can increase its share of capital without other 4 members agreeing – a primary requirement of India.

• The bank will allow new members to join but the BRICS capital share cannot fall below 55%.

• Initial authorized capital : 100 billion.

• Initial subscribed capital : 50 billion (each member gave 10 billion) .

For all the BRICS states :

• total shares 100,000.

• Shareholding capacity – 20%.

• Voting right – 20%.

• Authorized capital – 10 billion USD.

Official language :

• Chinese,

• English,

• Portuguese,

• Russian and

• 22 Official Languages of India.

Contingent Reserve Arrangement (CRA) :

• Provision of support through liquidity & precautionary instruments in response to potential short-term balance of payments pressures

• To provide protection against global liquidity pressures including currency issues where members’ national currencies are being adversely affected by global financial pressures.

• China → 41 Billion.

• Brazil, India, Russia → 18 Billion Each.

• South Africa → 5 billion.

Participant countries:

• Brazil,

• Russia,

• India,

• China,

• South Africa.

• None of the above country has veto power.

• Each country holds equal number of shares and equal voting rights.

• Initial capital for NDB – 100 billion, of which 12.5% to be paid by each member in 1st 7 years.

• 1st President of NDB from India – K. V. Kamath – former non-executive chairman of ICICI bank.

• NDB will allow new member to join but the BRICS capital share cannot fall below 55%.

Main organs of Articles of Agreement:

• Board of ministers or governors.

• Board of Directors.

• President : K. V. Kamath , Vice President : Mr. Vladimir Kazbekov.

• 1st President – India, Chairman of the Board of directors – Brazil, Chairman of Board of governors – Russians.