BRICS bank inaugurated in Shanghai, KV Kamath is head for 5 yrs

BEIJING: BRICS’ infrastructure-focused, New Development Bank (NDB) -- one of the two new multilateral banks heavily backed by China -- began operations in Shanghai on Tuesday with former ICICI Bank head KV Kamath at the helm.

Both the NDB and the recently-launched Asian Investment Infrastructure Bank (AIIB) of which is India is a founding member are often pitched as alternative to existing financial institutions like the World Bank (WB) and the International Monetary Fund (IMF).

The NDB, formed by the emerging economies of Brazil, Russian, India, China and South Africa will begin to operate with the initial capital of $50 billion. It will be expanded to $100 billion within the next couple of years, officials said.

Tuesday’s inauguration in China’s financial capital, Shanghai, was also attended by finance minister Lou Jiwei, the city mayor, Yang Xiong.

“Our objective is not to chal- lenge the existing system as it is, but to improve and complement the system in our own way,” NDB president KV Kamath was quoted as saying in a Reuters report.

The report added that the NDB had decided to set up a “hotline” with the AIIB to discuss issues, and to forge closer ties between “new institutions coming together with a completely different approach”.

The NDB will supplement the existing international financial system in a healthy way and explore innovations in governance models, Lou said.

Meanhwhile, WB president Jim Yong Kim released a statement congratulating KV Kamath and the founding members — Brazil, Russia, India, China, and South Africa.