The New Development Bank (NDB), backed by the BRICS (Brazil, Russia, India, China and South Africa) association, began operating in Shanghai on Tuesday, taking up its role as an alternative to existing institutions such as the World Bank.
"Our objective is not to challenge the existing system as it is but to improve and complement the system in our own way,” said NDB President Kundapur Vaman Kamath.
The BRICS bank currently has an initial capital of $50 billion but this is expected to expand to $100 billion over the next few years.
The capital will be used to "help finance joint, large-scale projects in transport and energy infrastructure, [and] industrial development," Russian President Vladimir Putin said when summarising the functions of the NDP during a summit in Ufa, the regional capital of Russia’s Bashkortostan province.
The agreement to establish the NDB was first inked in July 2014, and the bank's headquarters are based in Shanghai.
Within the NDB China has the largest share of voting rights, standing at 39.5 percent, as it has pledged to contribute close to $41 billion to the bank.
The BRICS countries together hold almost 42 percent of the world’s population in more than a quarter of the world’s surface area together with 20 percent of the world’s total GDP. Total trade between the countries currently stands at $6.14 trillion.