The New Development Bank, which was formally launched in Shanghai on Tuesday, by Brazil, Russia, India, China and South Africa, has the vision of serving as a more responsive alternative to major financial institutions such as the World Bank.
The inauguration of the lender comes less than a month after the launch of the China-led Asia Infrastructure Development Bank, which similarly aims to create a parallel global investment institution in which developing countries have greater influence.
Financial Times reported that although it has only five founding members compared with the AIIB’s 57, the NDB will begin with an initial capital of $100bn, the same as AIIB. The five countries all have equal voting shares.
“We believe the funding needs of Asia in the infrastructure space are so vast that there is easily space for the two of us and, indeed, many more lenders to participate,”, NDB president and former chief executive of ICICI, India’s largest private sector bank, K. V. Kamath, said.
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But unlike the AIIB, the NDB will not limit itself to Asia. Excluding South Africa, the four original BRIC countries comprise more than 40 per cent of the world’s population, a quarter of the world’s land area and more than 25 per cent of global gross domestic product.
Kamath and Lou Jiwei, Chinese finance minister, were careful not to criticise the World Bank, Asian Development Bank and other incumbent institutions on Tuesday. But they made clear that they believed that the NDB could improve upon existing norms.
“This bank will place greater emphasis on the needs of developing countries, have greater respect for developing countries’ national situation, and more fully embody the values of developing countries. Development is a dynamic process. There’s really no such thing as so-called ‘best practices,’” Lou said.
Kamath pledged to move the bank “from best practices to next practices,” adding that traditional development lending was often “too rigid, inflexible, and slow.”
“From a borrowing country’s perspective, these become huge deterrents to growth,” he said.
The bank aims to have the first set of loans disbursed by April next year.
