MOSCOW, February 25. /TASS/. The Federation Council, the upper house of Russia’s parliament, ratified on Wednesday an agreement on the New Development Bank, which the BRICS grouping of the world’s five major emerging economies (Brazil, Russia, India, China and South Africa) are establishing.
The agreement on the multilateral development bank, seen as an alternative to the US-dominated World Bank and International Monetary Fund, was signed in mid-July 2014 at the 6th summit of five major emerging national economies in Fortaleza, Brazil.
The New Development Bank will finance infrastructure projects and projects of sustainable development in the BRICS countries and developing countries.
The bank’s founding parties will be the BRICS countries, which are to be vested with special authority unlike other members. The president of the bank will be elected only upon submission by one of the founding parties and the position will rotate every five years among the BRICS nations.
The key decisions in the bank’s management bodies will be taken by a majority of the votes cast by the founding nations.
The bank will stipulate a three-tier corporate governance structure: the board of governors, the board of directors and the president.
The Bank’s first president will be from India and the first chairman of the board of directors will be from Brazil while a representative of Russia will be the first chairman of the bank’s board of governors.
Russia’s Finance Minister Anton Siluanov will be the first chairman of the New Development Bank Board of Governors, Deputy Finance Minister Sergei Storchak said in a live interview with Rossiya-24 TV Chanel on Tuesday.
The BRICS New Development Bank will have an authorized capital of $100 billion, including $50 billion in dedicated capital and $10 billion in paid-in capital ($40 billion paid on demand). Paid-in capital will be formed within seven years proportionately by the member states. Russia’s share will amount to $2 billion, the deputy finance minister said.
Russia’s Finance Ministry said on Tuesday it expected the New Development Bank to start working by late 2015.
"The stage of [the bank’s] establishment is a lengthy process and, as many of you may know, such banks reach full-scale operations on the fourth or fifth year of their existence, after they develop certain policies and procedures," Storchak told senators on Tuesday.
The agreement on the BRICS New Development Bank is open for accession by UN member states, including both developed and developing countries.
"It is very important that we should state from the very outset that the bank is open for membership to all interested states and is not just an institution of the BRICS forum," Storchak said.
The bank will be headquartered in Shanghai, China.