Here are ten things to know about the new BRICS bank:
The $100 billion development bank launched at the sixth BRICS - Brazil, Russia, India, China and South Africa - summit in Brazil is aimed at funding infrastructure projects in developing nations. The BRICS also set up a $100 billion currency reserves pool to help countries forestall short-term liquidity pressures.
The bank will be based in Shanghai, China. It was delayed because of tough negotiations over the location. India and South Africa too had their hats in the ring to host the bank.
India gets the first presidency for six years, followed by five-year terms for Brazil and Russia. (Read more...) China - which as the world's number 2 economy has wanted a greater influence over the bank to expand its political clout abroad - will not preside over it for the next two decades.
The bank will be called the New Development Bank, a name suggested by Prime Minister Narendra Modi.
The bank will begin with a subscribed capital of $50 billion divided equally between its five founders, with an initial total of $10 billion in cash put in over seven years and $40 billion in guarantees. China wanted a higher contribution pushing for economic strength of a member nation to be the criteria. But India and Brazil insisted on equal contribution. (The Biggest Challenge for BRICS Success? Big Brother China)
"We pulled it off 10 minutes before the end of the game. We reached a balanced package that is satisfactory to all,"a Brazilian diplomat told Reuters. Negotiations were reached at the eleventh hour due to differences between India and China. The impasse reflected the trouble BRICS nations have had in reconciling stark economic and political differences that made it hard for the group to turn rhetoric into concrete action.
The long-awaited bank is the first major achievement of the BRICS countries since they got together in 2009 to press for a bigger say in the global financial order created by Western powers after World War II and centered on the International Monetary Fund and the World Bank.
The BRICS were prompted to seek coordinated action following an exodus of capital from emerging markets last year, triggered by the scaling back of US monetary stimulus. The new bank reflects the growing influence of the BRICS, which account for almost half the world's population and about one-fifth of global economic output.
The bank is scheduled to start lending in 2016 and be open to membership by other countries, but the capital share of the BRICS cannot drop below 55 percent.
China, holder of the world's largest foreign exchange reserves, will contribute the bulk of the contingency currency pool, or $41 billion. Brazil, India and Russia will chip in $18 billion each and South Africa $5 billion. If a need arises, China will be eligible to ask for half of its contribution, South Africa for double and the remaining countries the amount they put in.