Although they have little in common politically, China and India have joined forces to build a cornerstone of a new global financial order that will give emerging-markets nations much more influence. No one better represents this cooperation than Kundapur Vaman (K.V.) Kamath, president of the recently launched New Development Bank (NDB), also known as the BRICS bank. The Shanghai-based multilateral lender is backed by the governments of Brazil, Russia, India, China and South Africa.
“India is the world’s largest democracy, and it is working with China, which is the world’s largest one-party state,” says Beijing-based political economist and author Laurence Brahm. “The launch of the BRICS development bank shows that despite the vast differences between the two, there could be a pragmatic approach that serves the interests of both countries,” adds Brahm, whose 2014 book, Fusion Economics: How Pragmatism Is Changing the World, examines how emerging-markets powers, especially China, are challenging U.S. dominance.
It has taken the BRICS countries three years to get the institution off the drawing board, and the bank still needs to staff up and decide its basic business model, including whether it will lend only to sovereigns and what interest rates it will charge. In picking Kamath, who spent several years at the Manila-based Asian Development Bank (ADB) in the late 1980s and early ’90s and then returned to India to transform ICICI Bank into the country’s leading retail bank, the governments have chosen a banker with the experience and skillset to tackle the challenge.
“He is without question one of India’s top financiers and is ideal to head up the New Development Bank,” says Brahm.
For his part, Kamath has asserted that the NDB isn’t out to undermine the World Bank or the ADB, which are led by the U.S., its European allies and Japan. “Our objective is not to challenge the existing system as it is but to improve and complement the system in our own way,” Kamath said at the bank’s launch ceremony in Shanghai on July 20. The 67-year-old explained that the bank plans to channel its funds to emerging markets, and aims to issue its first loans in April 2016.
China has pledged to contribute $41 billion of the bank’s $100 billion capital base, giving it the largest share of voting rights. Brazil, India and Russia will each pony up $18 billion; South Africa will contribute $5 billion. By comparison, the World Bank has some $220 billion in capital.
The NDB complements the Asian Infrastructure Investment Bank, also backed by China, which put up more than a quarter of the AIIB’s $100 billion in founding capital, with the rest coming from 56 other nations, including most Asian and many European countries. Neither the U.S. nor Japan is a founding member.
When it comes to the top job, the AIIB and the NDB have taken a similar approach to the World Bank and the IMF. Just as the U.S. and Europe have split the posts at those two institutions, a Chinese national — Jin Liqun, a former vice minister of Finance — will lead the AIIB, whereas a representative from one of the other BRICS countries will helm the NDB.
Kamath began his career in 1971 by joining the project finance group of Industrial Credit and Investment Corp. of India, then largely a business development agency. After taking on several other roles at the firm, he moved to the ADB in 1988 to head its private sector department. He returned to ICICI in 1996 as managing director and CEO. He ramped up its consumer banking activities and led the renamed ICICI Bank to privatization in 1998.
More recently, Kamath served as chairman of Indian information technology giant Infosys from mid-2011 until this June. Kamath helped the Bangalore-based company to further grow its business globally by creating a $1 billion acquisition fund and making several purchases in the U.S. and Europe.
Kamath boosted morale at Infosys, according to former colleague Helen Rosen, who until earlier this year was a senior principal with its financial services consulting unit in New York. “He did a good job — the company improved its performance under his leadership,” says Rosen, COO of Global Access, a New York–based investment consulting firm.
