Tracing the roots of BRICS bank starting from its origination till

its culmination
As World Cup fever recedes in the month of July, the heads of state from BRICS Countries
Brazil, Russia, India, China, and South Africa met in Fortaleza, Brazil and agreed to
establish a New Development Bank (NDB) at the 6 th BRICS Summit meeting. The bank will
have a president (an Indian for the first six years), a Board of Governors Chair (a Russian),
a Board of Directors Chair (a Brazilian) and a headquarters (in Shanghai).
Let us take a deeper look at how the wheels were set into motion for the creation of this
multilateral financial institution, tracing the roots of BRICS bank starting from its
origination till its culmination.
The rising economic strength of the BRICS countries has outpaced the increase in their
voice at the World Bank and the International Monetary Fund (IMF). Brazil now has more
embassies in Africa than does the United Kingdom. China has become Africa’s most
important trading partner. Low-income countries have also seen unprecedented growth in
foreign aid with China, Brazil, and India all becoming larger donors. In the meantime, longstanding dissatisfaction with Bretton-Woods institutions has also pushed BRICS towards a
developing-country alternative to global development finance.
The seeds for setting up a new international bank were sown in the fifth BRICS Summit
which was held at Durban (South Africa) in March, 2013. The theme of the 5th BRICS
Summit was – “Partnership for Development, Integration and Industrialization.
The 5th BRICS summit culminated in a joint declaration that enunciated the BRICS leader’s
commitment to set up a BRICS Development Bank that will cater to the infrastructure
needs of emerging powers as well as Africa and the larger global South. The new proposed
Bank is being widely viewed as an attempt to create a rival Bank to the West-dominated
Bretton Woods twins and a potential game-changer in spurring reform of the global
financial governance architecture.
However, there has been also disappointment at the outcome of the Durban summit, as it
was expected that the details of the Bank will be announced, and not merely a reiteration
of the viability of the Bank, which was proposed at the 2012 New Delhi summit too.
Crucial issues concerning the Bank, including the initial seed capital, the governance board
and location of the headquarters of the bank, are still to be resolved.
Having agreed to set up a new international development bank during the 5 th BRICS
summit, the sixth summit saw the official inauguration of the New Development Bank.
The sixth BRICS summit was held at Fortaleza, Brazil in July 2014. The theme of the 6th
BRICS Summit was – “Inclusive Growth, Sustainable Development. The member countries
intended to complete the arrangements regarding setting up of a BRICS bank prior to the
2014 summit. The summit was initially scheduled for March 2014, but was shifted to a
later date at China's request; it was held in July 2014.
The final declaration of the summit, announced that the leaders of the five countries have
signed the Agreement establishing the New Development Bank (NDB), the world’s latest
multilateral financial institution with the purpose of mobilizing resources for infrastructure

The first chair of the Board of Governors shall be from Russia. will end up repeating the same errors that other multilateral banks have made in the past. strengthen the global financial safety net and complement existing international arrangements. Although this has been positively reviewed by people across the globe. New Development Bank and CRA had been announced at the Durban Summit. a type of International Monetary Fund (IMF) with a more restrictive scope and an initial size of US$ 100 billion. This arrangement will have a positive precautionary effect. there is a risk that the new bank will become another tool for supporting development models that favor economic performance metrics and indicators over mechanisms that promote fundamental rights and cooperation between people to overcome social injustices. The Agreement is a framework for the provision of liquidity through currency swaps in response to actual or potential short-term balance of payments pressures. the NDB. The first chair of the Board of Directors shall be from Brazil.and sustainable development projects in BRICS and other emerging and developing economies. Based on the track record of the national development banks from the BRICS countries. If this forecast turns out to be accurate. The summit also foresaw the signing of the Treaty for the establishment of the BRICS Contingent Reserve Arrangement (CRA). but only now do they have legal validity. The creation of both. The headquarters of the Bank shall be located in Shanghai. The Bank shall have an initial authorized capital of US$ 100 billion. The concerns of organizations like Conectas involve the priorities of the recently-created NDB. The New Development Bank Africa Regional Center shall be established in South Africa concurrently with the headquarters. instead of representing an innovative solution. help countries forestall shortterm liquidity pressures. the creation of the new multilateral bank also saw some criticism. The first President of the Bank shall be from India. promote further BRICS cooperation. The initial subscribed capital shall be of US$ 50 billion. in 2013. . equally shared among founding members.