BRICS has officially launched the New Development Bank at the Russian city of Ufa, where the seventh meeting of the BRICS state heads meeting is taking place.
The bank will be headed by its first President, K V Kamath of India. Kamath has told that the new bank will raise money from both internal (within BRICS) and external sources.
Fund raising is an important task of the bank as the structure of the new institution is equal contribution from all members. This means that the heavy weight China and the small member – South Africa have to contribute equally.
“We will explore resource raising on various markets – hard currency markets and local currency markets,” KV Kamath said in an interview in Ufa.
The bank, has an initial capital of $50 billion, and aims to raise it to $100 bn in future.
With the launch, the New Development Bank has to address many issues, including fund raising, extension of lending to non-BRICS countries and sanctioning of first loan.
Russia, which is struggling under the West induced sanctions, pressurizing the body to get the first set of loans. Many Russian firms are facing foreign currency shortages.
Earlier, Russian Finance Minister Anton Siluanov told news persons that some projects, such as a request by Rosneft for financial support, may be listed for possible NDB funds. Similarly, Russia also expects loans to some of its banks.
The BRICS bank is modeled as an alternative to the West led Bretton woods institutions – the World Bank and the IMF.