BRICS Set UP A New Bank With First President From India

BRICS (Brazil, Russia, India, China and South Africa) nations have set up The New Development Bank, a Shanghai-based development bank, and a reserve fund to finance infrastructure projects and tackle future economic crises.

"These initiatives show that, despite our diversity, our countries are committed to a solid and productive association," said Brazilian President Dilma Rousseff.

Russian President Vladimir Putin hailed the agreements as "a very powerful way to prevent new economic difficulties."
The New Development Bank would be a rival the Washington-based World Bank while the reserve is seen as a ‘mini-IMF.’

BRICS leaders have pressed for reform of the International Monetary Fund to give developing countries more voting rights.

"The IMF urgently needs to review its distribution of voting power in order to reflect the unquestionable weight of emerging countries," said Rousseff.

The development bank will have an initial capital of $50 billion that could increase to $100 billion. It would be funded equally by each nation.

To ease apprehensions of any nation getting more power than the other, BRICS leaders agreed to have the bank's headquarters in Shanghai. The bank’s first president will be from India while the board’s first chairman will be from Brazil.

An Africa Regional Centre will also be set up in South Africa. Its aim would be to help the emerging and developing nations mobilise resources for various development projects. The Contingent Reserve Arrangement will have a fund of $100 billion in order to fight potential economic volatility in case the United States stops its stimulus policy.

China is expected to make the biggest contribution of $41 billion, followed by $18 billion each from Brazil, India and Russia and $5 billion from South Africa.