Mar 26, 2013, 10.16 PM IST
In a major move aimed at reforming the global financial architecture, the BRICS finance ministers today agreed on the setting up of a development bank to fund infrastructure and development projects in the five-nation grouping of emerging powers.
"We are reporting to the Heads (of governments) that the BRICS bank is feasible and viable," Finance Minister P Chidambaram told PTI after a meeting with his counterparts from Brazil, Russia, China and host South Africa in this port city ahead of the summit tomorrow.
The agreement came after weeks of negotiations among the five emerging economies in a move aimed at changing the rules of governance in global governance, especially the Bretton Woods institutions like the World Bank and International Monetary Fund.
The summit formally opened tonight with a cultural programme and a dinner hosted by South African President Jacob Zuma but main discussions will be held tomorrow. A 'Durban Declaration' will be released at the end of the summit.
Senior Indian negotiators have said that the BRICS bank initiative will be cleared at the level of the heads of government when the summit adopts the report of the finance ministers. Issues including capital, membership and governance still dog the BRICS bank over which a final document may get ready by next year. Still it may take years before it finally gets going, Indian sources said.
Hailing the BRICS bank initiative, FICCI President Naina Lal Kidwai, who is leading the Indian delegation at the BRICS business forum, said first it will lead to credit enhancement as existing banks alone were not able to fund projects in the countries because of the tenure of the loans and deposits they have.
The BRICS bank can also borrow from other banks to pitch in with the much-needed capital, she said. The BRICS bank will focus on funding infrastructure and development projects in the BRICS and other emerging economies and developing countries in a direct challenge to the way the World Bank and IMF do their business.
However, Indian negotiators are also conscious of the fact that issues like capital, membership and governance are yet to be thrashed but before the summit can put a seal of approval on launching the BRICS bank.
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