The deal to establish the new development bank of the group of BRICS countries (Brazil, Russia, India, China and South Africa) was reached on 15 July 2014 on the first day of the 6thBRICS Summit being held at Fortaleza, Brazil. This was, however, possible after intense last-minute negotiations between India and China over the headquarters of the new bank and other related issues.
We present here a brief factsheet about this proposed bank which could become a new milestone for development in 5 BRICS countries.
What will be the official name of this bank?
New Development Bank – NDB (The bank was formerly referred to as the BRICS Development Bank)
……………………………………………………………………………………………………………………
What are the main objectives of NDB?
– To prove as an alternative to international financial institutions like the International Monetary Fund (IMF) and the World Bank
– To counter the influence of dollar and other Western currencies
– To foster greater financial and development cooperation among the five emerging markets
– To create a ‘Contingent Reserve Arrangement’ (CRA) worth US$100 billion which will help member countries counteract future financial shocks
– To lend money to infrastructure projects within the BRICS countries, including the construction of roads, bridges and airports
– To provide assistance to other countries suffering from the economic volatility in the wake of the United States’ exit from its expansionary monetary policy
……………………………………………………………………………………………………………………
Where will NDB headquartered?
At Shanghai (China)
……………………………………………………………………………………………………………………
Who will be the members of NDB?
The 5 BRICS members – Brazil, Russia, India, China and South Africa
– The first Chief Executive of NDB would come from India.
– The inaugural Chairman of the Board of directors will come from Brazil.
– The inaugural chairman of the Board of Governors will be Russian.
– The first bank regional centre will be located in South Africa.
……………………………………………………………………………………………………………………
Can other countries of the World become members of NDB?
NDB will be open to membership by other countries, but the capital share of the BRICS’s members cannot drop below 55%
……………………………………………………………………………………………………………………
What will be the financial structure of NDB?
– The paid-up capital of NDB will be worth $10 billion and each of the 5 members will provide $2 billion for a period of 7 years
– The total initial capital of NDB will be worth $100 billion from which financial assistance will be provided. For this $100 billion fund, China will contribute $41 billion, Brazil, Russia and India would give $18 billion each, and South Africa would contribute $5 billion.
……………………………………………………………………………………………………………………
Brief history about conceptualization of NDB
– The concept for establishing an exclusive bank for BRICS countries was first brought for discussion during the 4th BRICS Summit held in New Delhi during 2012.
– The establishment of the bank was finally agreed to by BRICS leaders at the 5th BRICS Summit held in Durban (South Africa) during March 2013.
……………………………………………………………………………………………………………………
Disputes in establishment of NDB
– Negotiations to create the bank dragged on for more than two years since 2012 as Brazil and India fought China’s attempts to get a bigger share in the proposed bank than the other countries. China argued that the economic strength of a member nation should be the criteria for contribution to the bank – a higher contribution will automatically mean greater control. But India demanded that each member have an equal share.
– Negotiations had also been stalled over who would host the bank – China, India or South Africa.
No comments:
Post a Comment