Officials from the world’s largest emerging nations launched the New Development Bank (NDB) on Tuesday, the second of two new policy banks heavily backed by Beijing that are being pitched as alternatives to existing institutions such as the World Bank.

Also known as the BRICS bank, it follows soon after the establishment of the China-led Asian Investment Infrastructure Bank (AIIB). The new bank will fund infrastructure and development projects in BRICS countries – Brazil, Russia, India, China and South Africa.

The ceremony on Tuesday concludes a lengthy wait since the NDB was first proposed in 2012. Disagreements over the bank’s funding, management and headquarters had slowed its launch.

“Our objective is not to challenge the existing system as it is but to improve and complement the system in our own way,” NDB President Kundapur Vaman Kamath said.

He added that after a meeting with the AIIB in Beijing, the NDB had decided to set up a “hotline” with the AIIB to discuss issues, and to forge closer ties between “new institutions coming together with a completely different approach.”

The ceremony, held in Shanghai where the NDB’s headquarters are located, was relatively low-key in comparison to a June signing of the articles of agreement for the AIIB in Beijing, which was attended by delegates from 57 countries and President Xi Jinping.

The NDB has initial capital of $50 billion, which will be expanded to $100 billion within the next couple of years.

Kamath, a former executive with India’s largest private bank ICICI Bank, told Reuters earlier this month that the NDB plans to issue its first loans in April next year.

China has pledged to contribute $41 billion to the NDB, giving it the largest share of voting rights at 39.5 percent.

Brazil, India and Russia will each contribute $18 billion, while South Africa will contribute $5 billion.

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World Bank Group welcomes launch of New Development Bank

The World Bank Group on 20 July issued the following statement by World Bank Group President Jim Yong Kim on the launch of the New Development Bank:

“We would like to congratulate Mr. K.V. Kamath, President of the New Development Bank, and the founding members – Brazil, Russia, India, China, and South Africa – on this important occasion.

The New Development Bank joins a growing number of multilateral institutions – including the Asian Infrastructure Investment Bank – that are working to address the world’s huge infrastructure needs. Emerging markets and low-income countries face an annual gap of $1 trillion to $1.5 trillion in infrastructure spending.

We are committed to working closely with the New Development Bank and other multilateral institutions, offering to share our knowledge and to co-finance infrastructure projects. These types of partnerships will be essential to reach our common goals to end extreme poverty by 2030, boost shared prosperity, and to reduce inequalities.”