The Brics group of emerging economies has launched the New Development Bank, which will be headquartered in Shanghai.
The bank, which is backed by Brazil, Russia, India, China and South Africa, will lend money to developing countries to help finance infrastructure projects.
The BBC reports the bank is seen as an alternative to the World Bank and the International Monetary Fund, but the group insists the NDB will not be a rival.
NDB president Kundapur Vaman Kamath says: “Our objective is not to challenge the existing system as it is but to improve and complement the system in our own way.”
NDB’s leadership will work on a rotation basis.
Kamath previously worked as chairman of Indian IT services company Infosys Limited. He was also non-executive chairman of Indian private bank ICICI Bank.
The NDB will begin operations with $50bn (£32bn) in subscribed capital, which will be expanded to $100bn within the next two years. The lender is expected to issue its first loans early next year.
The first project for the NDB was proposed in 2012 but disagreements among member nations over the bank’s funding, management and headquarters delayed the launch.