Asian Infrastructure Investment Bank will not eclipse BRICS bank

The Board of Governors of the New Development Bank (NDB) set up by Brazil, Russia, India, China and South Africa (BRICS) is set to have its first meeting in Moscow on Tuesday, even as its founders scotched speculations that it might be eclipsed by the recently launched Asian Infrastructure Investment Bank (AIIB).

“The NDB set up by the BRICS and the AIIB are not competitors,” Sujata Mehta, Secretary (Economic Relations) of the Ministry of External Affairs, told reporters in New Delhi. She was replying to a question if the AIIB would lessen the relevance of the NDB.

Mehta pointed out that the AIIB would finance projects related to development of infrastructures in Asia. The NDB set up by the BRICS, on the other hand, would be “a global bank” to fund infrastructure projects in developing nations around the world, she added.

The first meeting of the Board of Governors of the new bank set up by BRICS, will take place just a day before the five-nation bloc will have its seventh summit at Ufa in Russia. Prime Minister Narendra Modi will take part in the summit along with Brazilian President Dilma Rouseff, Russian President Vladimir Putin, South African President Jacob Zuma and and Chinese President Xi Jinping.

The AIIB was conceived by China in 2013. India and 48 other countries joined China as co-founder of the bank and documents detailing each member’s share in its initial capital were signed in Beijing on June 28 last.

Officials of Brazil, Russia, China and South Africa too dismissed the perception that the AIIB would lessen the relevance of the NDB.

Eminent banker K V Kamath, whom New Delhi nominated to be the first president of the NDB, will also take up his new assignment early next week, and attend both the meetings, in Moscow, and Ufa.

The BRICS in July 2014 inked an agreement for establishing the New Development Bank to mobilise resources for infrastructure and sustainable development projects, not only in the five member nations, but also in other emerging and developing economies.

The proposal for setting up a BRICS development bank was first mooted by India in 2012. Modi, Rouseff, Putin, Xi and Zuma will formally launch the bank during the summit in Ufa. The NDB will have its headquarters at Shanghai in China. A nominee of Brazil will first chair the Board of Directors of the bank, which will have a regional centre in South Africa to oversee financing projects in Africa.