The mooted BRICS bank of emerging powers is intended to complement, rather than compete with Western-dominated institutions on the world stage, the Indian Finance Minister said Monday.
Finance Minister P. Chidambaram also said India supports Japan's nomination of a senior finance ministry official for the top job at the Asian Development Bank (ADB), as Tokyo looks to keep hold of a role it has held for almost 50 years.
The BRICS bank is seen as a way of challenging the rules set by existing institutions like the World Bank, countering Europe's economic crisis and addressing the $4.5 trillion in infrastructure spending the BRICS are estimated to need over the next five years.
"The BRICS bank will not be a competitor for the World Bank or the ADB. It will complement the World Bank or the ADB," Chidambaram told a news conference in Tokyo during a two-day visit to Japan.
"Why do we need the bank? Because, the funds that are now available through the existing multilateral institutions are insufficient. The World Bank, the ADB, provide funds but (they are) insufficient," he said.
"These countries have large savings... So we want to mobilise our savings as well as take capital to other member countries in order that we can lend more," Chidambaram said, referring to Brazil, China, India, Russia and South Africa.
"There are governance problems... reforms of the IMF and the World Bank have been considerably delayed because of governance issues," he said, adding plans to boost capital in these institutions have yet to be realised.
The comments came after leaders from the BRICS group of emerging powers held talks last week in the South African port city of Durban to finalise the plan.
The top jobs for the World Bank and the International Monetary Fund have been historically occupied by Americans and Europeans, respectively.
Similarly, every ADB president has been Japanese since its founding in 1966.
However emerging nations have become increasingly vocal critics over US and European control of such institutions even as their own economic power and global influence soars.
But Chidambaram said India has already expressed its support to Japanese candidate Takehiko Nakao to head the Manila-based ADB with its chief Haruhiko Kuroda having stepped down to take over as head of the Bank of Japan.
"Mr Nakao met me earlier today and thanked me" for the support, he said.
Calling for more Japanese investment in India, he said: "We are governed by the rule of law. We are a democracy. We have free press...We have a system of law and courts. Any dispute will be resolved through legal suit...that is what makes India not only an attractive destination but a safe destination."
During his visit in Japan aimed at boosting economic ties, Chidambaram will meet Japanese Prime Minister Shinzo Abe and Finance Minister Taro Aso as well as Bank of Japan governor Kuroda, he said in a press note.
Japan last week pledged 220 billion yen ($2.3 billion) for infrastructure projects in the huge country.
The yen-denominated loan package covers four projects, including a freight railway project connecting New Delhi and Mumbai, and a subway construction project in southern India.
Separately, Japan also pledged to provide India with fresh loans of 71 billion yen for the construction of an underground railway in Mumbai.