JOIN USEminent banker K V Kamath was today appointed as head of the USD 50 billion New Development Bank being set up by the five emerging economies of BRICS grouping. Kamath will have a five year term of the bank, which is likely to be operationalised within one year, Finance Secretary Rajiv Mehrishi said.
Kamath is the Chairman of the India's largest private sector bank ICICI.Leaders of the emerging economies of Brazil, Russia, India, China and South Africa (BRICS) had last year reached an agreement to establish the New Development Bank, with its headquarters in Shanghai. As per the agreement, India got the right to nominate the first president.
Kamath has been named the first president of the NDB, Mehrishi said.The BRICS nations account for nearly USD 16 trillion in GDP and 40 per cent of the world's population.
The bank will start with an initial paid-in-capital of USD 50 billion with each BRICS country contributing USD 10 billion.
After serving at ICICI for more than a decade, Kamath had moved to Asian Development Bank, Manila, in the Private Sector department in 1988.
His principal work experience at ADB was in various projects in China, India, Indonesia, Bangladesh and other emerging nations.
Making a strong pitch for speeding up the creation of the BRICS development bank, Prime Minister Narendra Modi had said last year that India hopes to ratify the agreement over the financial institution by 2014-end, and 2016 should be set as the target for its inauguration.
Modi had made this remark at an informal meeting with Brazilian President Dilma Rousseff, Russian President Vladimir Putin, Chinese President Xi Jinping and South African President President Jacob Zuma on the sidelines of the G20 summit at Brisbane (Australia) in November.
India's presidency will be followed by Brazil and Russia who will have five years term each under an agreement reached after intense negotiations among the five country-grouping.
"The appointment will be effective when he becomes free from his current assignment. I think he is on some boards. It may take couple of days," Mehrishi said.
"There is no final decision on his tenure. But it is likely to be 5 years. We got ratification from President of India," he said, adding it has to be ratified by all the member nation.
India is hoping to get more funds for infrastructure development from BRICS bank, he said.
The decision to set up this multilateral funding agency was taken in Fortaleza, Brazil at the BRICS Summit which was attended by Modi.
The BRICS development bank, an idea which was conceived in Delhi in 2012 and approved in Durban in 2013, is to be set up with an initial corpus of USD 50 billion, with scope for expansion up to USD 100 billion when new members are added.
For the initial USD 50 billion, India wants equal contribution by all the five members of USD 10 billion. This is because India doesn't want the development bank to fall into the ownership pattern of IMF and the World Bank, with a distorted shareholding.