Fortaleza, Brazil, 15 July-2014, NDTV: The group of five BRICS emerging market countries has signed a deal that will create a $100 billion development bank and a currency reserve pool worth the same amount. It will be called the New Development Bank – a name suggested by Prime Minister Narendra Modi, and the first president of the bank will be from India.
“The agreement towards setting up the BRICS New Development Bank is a significant step. I am happy the initiative announced in 2012 in Delhi has become a reality,” PM Modi said.
The new bank is likely to have its headquarters in Shanghai in China. Sources said that India’s demand for an equal share in the bank has also been accepted.
BRICS is a group of emerging economies and draws its name from the five member countries – Brazil, Russia, India, China and South Africa.
Negotiations had been stalled on a dispute between China, India and South Africa over who would host the bank. The disagreement over the location has also delayed a decision on which of the countries will hold the first five-year presidency of the bank.
There have also been tough negotiations over shareholding. China has 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 has demanded that each member have an equal share.
Negotiations to create the bank dragged on for more than two years as Brazil and India fought China’s attempts to get a bigger share in the lender than the others. The stark economic and political differences between the BRICS countries have made it difficult for the group to turn rhetoric to concrete action in coordinating policies.
BRICS is also considering starting a joint infrastructure fund with initial capital of around $10 billion, a source close to the discussions told Reuters on Tuesday. The money would be invested in infrastructure projects within the BRICS countries, including the construction of roads, bridges and airports.
The BRICS summit is Mr Modi’s first multilateral engagement since he took over as Prime Minister in May this year. He met Chinese president Xi Jinping this morning.