The bank will finance infrastructure projects in BRICS nations with 40 percent population of the world
GN Bureau | May 11, 2015
KV Kamath has been elected as the chief of $50-billion BRICS New Development Bank, which aims to fund infrastructure projects in developing nations. The bank looks to be an alternative to other multi-lateral agencies with the focus on the development agenda of BRICS countries.
At the BRICS summit in Brazil last year India was accepted as the head of the development bank. China and India will preside over its operations for the first six years, followed by five-year terms for Brazil and then Russia, leaders of the five-country group announced at the 6th BRICS (Brazil, Russia, India, China and South Africa) summit.
The BRICS countries comprise over one-fifth of the global economy at nearly $16 trillion in GDP and 40 per cent of the world's population.
Kamat is ICICI Bank's non-executive chairman and chairman of IT giant Infosys. It will be headquartered in Shanghai, China. He has a degree in mechanical engineering and did his management studies at the Indian Institute of Management, Ahmedabad.
Kamath has had served at the Asian Development Bank. Kamath is known for his views on low interest rates and optimistic outlook. At ICICI Bank he pioneered bold fund raising programmes, expanding the scope of financial markets, funding middle-class consumption and enabling global dreams of Indian companies.
What is BRICS bank?
The NDB has been given $50 billion in initial capital. The BRICS bank appears to work on an equal-share voting basis, with each of the five signatories contributing $10 billion. The capital base is to be used to finance infrastructure and “sustainable development” projects in the BRICS countries initially, but other low- and middle-income countries will be able buy in and apply for funding. BRICS countries have also created a $100 billion Contingency Reserve Arrangement (CRA), meant to provide additional liquidity protection to member countries during balance of payments problems. The CRA is being funded 41 percent by China, 18 percent from Brazil, India, and Russia, and 5 percent from South Africa.
Developing nations hope that BRICS bank/CRA may eventually challenge World Bank-IMF hegemony over matters such as: funding for basic services, emergency assistance, policy lending, and funding to conflict-affected states.
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