Indian government has named banking sector veteran KV Kamath as its nominee to take over as the first head of Shanghai-headquartered New Development Bank (NDB), on Monday.
NDB is a newly christened international development finance bank set up by five large emerging economies often clubbed under BRICS (Brazil, Russia, India, China and South Africa).
The new bank with initial authorised capital of $100 billion was ideated around a year ago and as per the agreement, the organisation was to be based in China and its first chief was to be an Indian nominee. China and India are the two top emerging economies by both size and growth rate.
The bank is seen as an alternative to the World Bank and IMF, two large global financial institutions which are largely controlled by developed economies in terms of agenda and strategy.
For Kamath, who retired as managing director and CEO of India's top private lender by balance sheet ICICI Bank in 2009, this marks a high profile change. One of the top names in Indian banking sector, Kamath is currently non-executive chairman of ICICI Bank and IT giant Infosys Ltd.
The IIM Ahmedabad alumni started his career in 1971 at ICICI, an Indian financial institution that founded ICICI Bank and merged with it in 2002. In 1988, he moved to Asian Development Bank and spent several years in Southeast Asia before returning to ICICI as MD and CEO in 1996. Under his leadership, the ICICI Group went into aggressive expansion mode.
He was conferred with the Padma Bhushan, one of India's highest civilian honours, in 2008.
NDB was founded with primary focus on financing infrastructure projects and to build up a contingency reserve arrangement for the nations under its purview. Contingency reserve seeks to provide support through liquidity and precautionary instruments in response to actual or potential short-term balance of payments pressures.
The bank is authorised to lend up to $34 billion annually for infrastructure projects and each of the members is expected to contribute $10 billion. While the bank will allow new members to join, the collective share of founding members will be at least 55 per cent.
It will also compete with China-led Asian Infrastructure Investment Bank (AIIB).