SEPARATE DEVELOPMENT BANK FOR BRICS

In a major achievement for India in its campaign for reforming the international financial architecture, BRICS nations today decided to establish a new development bank to finance infrastructure and to create a USD 100 billion Contingency Reserve Arrangement to tackle any financial crisis in the emerging economies. The decision was taken at the BRICS Summit here which also launched a Business Council to encourage investment and trade in member countries and to expand business cooperation. Leaders of the inter-continental grouping including Prime Minister Manmohan Singh, met here this morning for an extended session and accepted the report of their finance ministers saying "we are satisfied that the establishment of a New Development Bank is feasible and viable". "We considered that developing countries face challenges of infrastructure development due to insufficient long-term financing and foreign direct investment, especially inestment in capital stock. "This constrains global aggregate demand. BRICS cooperation towards more productive use of global financial resources can make a positive contribution to addressing this problem," the laders said in a statement after the two-hour summit. However, the leaders did not decide on the capital for the proposed bank leaving it to the finance ministers to negotiate this and other issues before September.