BRICS and New Development Bank
BRICS is the acronym for an association of five major emerging national economies: Brazil, Russia, India, China and South Africa.
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The grouping was originally known as “BRIC” before the inclusion of South Africa in 2010.
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The BRICS members are all developing or newly industrialised countries, but they are distinguished by their large, fast-growing economies and significant influence on regional and global affairs; all five are G-20 members.
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Since 2010, the BRICS nations have met annually at formal summits. Russia currently holds the chair of the BRICS group, and hosted the group’s seventh summit in July 2015.
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As of 2015, the five BRICS countries represent over 3 billion people, or 42% of the world population; as all five members are in the top 25 of the world by population, and four are in the top 10. The five nations have a combined nominal GDP of US$16.039 trillion, equivalent to approximately 20% of the gross world product, and an estimated US$4 trillion in combined foreign reserves.
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Bilateral relations among BRICS nations have mainly been conducted on the basis of non-interference, equality, and mutual benefit (win-win).
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The BRIC grouping’s first formal summit, also held in Yekaterinburg, commenced on 16 June 2009.
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The BRICS Forum, an independent international organisation encouraging commercial, political and cultural cooperation between the BRICS nations, was formed in 2011.
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In late March 2013, during the fifth BRICS summit in Durban, South Africa, the member countries agreed to create a global financial institution which they intended to rival the western-dominated IMF and World Bank.
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After the summit, the BRICS stated that they planned to finalise the arrangements for this New Development Bank by 2014. However, disputes relating to burden sharing and location slowed down the agreements.
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The idea for setting up the bank was proposed by India at the 4th BRICS summit in 2012 held in Delhi. The creation of a new development bank was the main theme on the agenda for the summit.
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BRICS leaders agreed to set up a Development bank at the 5th BRICS summit held in Durban, South Africa on 27 March 2013.
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On 15 July, the first day of the BRICS 6th summit in Fortaleza, Brazil, the group of emerging economies signed the long-anticipated document to create the US$100 billion New Development Bank (formerly known as the “BRICS Development Bank”) and a reserve currency pool worth over another US$100 billion.
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The New Development Bank (NDB), formerly referred to as the BRICS Development Bank,is a multilateral development bank operated by the BRICS states (Brazil, Russia, India, China and South Africa) as an alternative to the existing American and European-dominated World Bank and International Monetary Fund.
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The goal of the bank is to “mobilize resources for infrastructure and sustainable development projects in BRICS and other emerging economies and developing countries”.
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The bank is headquartered in Shanghai, China.
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The first president will be from India,the inaugural Chairman of the Board of directors will come from Brazil and the inaugural chairman of the Board of Governors will be Russian.
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The 7th BRICS summit in July 2015 marked the entry into force of the Agreement. On 11 May 2015, K. V. Kamath was appointed as President of the Bank.
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Each participant country holds an equal number of shares and equal voting rights, and none of the countries will have veto power.There will be 1 million shares with a value of USD 100 000 (initially USD 500 000 shares), 20% of which will have to be directly paid in to the bank in the first 7 years after entry into force.
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BRICS offer new structures that can compete with long-standing institutes like IMF and World Bank.
