The leaders of these five countries met in Brazil and signed an agreement to establish New Deve-lopment Bank, with a subscribed capital of $ 50 billion, equally shared by the five nations. China was able to bargain for the location of the head quarters of the new bank in Shanghai while India got the chairmanship of the Bank for the first six years. The establishment of this bank could change the landscape of international finance, curtailing the domination of the World Bank and IMF. The new bank represents the silently growing influence of BRICS countries, which account for 50 per cent of the world’s population and 20 per cent of global GDP.
At present Indian banks have very little presence in these countries. In Brazil, State Bank of India (SBI) has only a Rep. Office. In Russia, SBI, jointly with Canara Bank, has a fully owned subsidiary bank, besides a fully owned subsidiary of ICICI Bank. In China, SBI has two branches; Bank of Baroda and Bank of India have one each. There is also a branch of Axis Bank Ltd. In South Africa, there are four branches; Bank of Baroda having two and SBI and Bank of India having one each. Consi-dering the size of these countries, the presence of Indian banks is insignificant. As far as the reciprocal situation is concerned, banks from China and Russia alone have entered the Indian banking space. It is necessary that Indian banks formulate a branch expansion programme in these countries in the next couple of years.
The new development bank is expected to play a crucial role in financing the infrastructure projects in the BRICS countries. The power and transport sectors need long-term money. With the support of this bank the member countries could achieve higher rates of economic development.