New Development Bank Launched by Brics Countries in Shanghai

Brazil, Russia, India, China, and South Africa or collectively known as Brics group of countries launched a New Development Bank (NDB) in Shanghai last Tuesday (July 21).

The NBD will offer loans to developing countries to aid in financing infrastructure projects.

The bank is perceived as an alternative to the World Bank and the International Monetary Fund (IMF). However, it is not a rival, the group says.

"Our objective is not to challenge the existing system as it is but to improve and complement the system in our own way," NDB President Kundapur Vaman Kamath said.

The World Bank and IMF were criticized by the BRICS countries for not granting enough voting rights to developing

nations.

Early next year, NDB is expected to issue its first loans.

The final details were discussed in the Russian city Ufa in the last Brics summit. Two weeks after, the opening will follow.

Russian Foreign Minister Sergei Lavrov said during that time that the five countries  "illustrate a new polycentric system of international relations."

The bank will start out with $50bn (£32bn) as capital, which will be doubled in the coming years.

China -  the world’s second largest economy - is the biggest contributor. Significantly, it also led the establishment of another new international bank, the Asian Infrastructure Development Bank based in Beijing.

Through a rotating leadership, the NDB will be headed by the first president, Mr. Kamath, coming from India.

The project was first proposed in 2012, but drew out negotiations over headquarters, management and funding, which caused the delay in the actual launch.