An Indian proposal to explore whether the developing world can set up its own alternative to the World Bank or International Monetary Fund (IMF) is on its way to a feasibility test.

The idea, described by international observers as a push for a world banking revolution, is to be discussed by the Brics nations later this month following a thumbs-up from China yesterday.

India wants the Brics member countries — Brazil, Russia, India, China and South Africa — to set up a multilateral “South-South bank” that will finance projects in the developing world.

The idea is a challenge to the West’s hegemony over the existing multilateral banks, such as the IMF and World Bank. Brazil, Russia and South Africa had expressed support when India circulated a note on the subject on the sidelines of the G20 finance ministers’ meeting in Mexico last week.

Yesterday, during talks here between foreign minister S.M. Krishna and his Chinese counterpart Yang Jiechi, Beijing said it favoured a discussion during the March 28-29 Brics Summit in New Delhi.

Sources said a South-South bank was needed because the financiers of the existing multilateral banks, the US and the European Union, faced an economic crunch and were therefore unlikely to fund projects in the developing world. Besides, they said, these multilateral banks had historically failed to address the poorer nations’ development needs.

However, the sources conceded, Brics may not push for a South-South bank if Europe and America accept their long-standing demand for reforming the existing multilateral banks. Prime Minister Manmohan Singh has repeatedly raised the issue at G20 summits, saying emerging economies need adequate representation in these banks’ decision-making processes.

The Brics economies have shown rapid growth in the past decade. China has the world’s second-largest economy, Brazil the seventh, India the ninth and Russia the eleventh.

There is also a proposal that the developing countries, led by Brics, field their own candidate for World Bank president, in an election scheduled a few months from now. The possible candidates are former Nigerian finance minister Ngozi Okonjo-Iweala and India’s Nandan Nilekani.

Okonjo-Iweala, now a World Bank director, is a former vice-president of the bank. Nilekani, a former Infosys co-chairman, heads the Unique Identification Authority of India.

Washington has traditionally had a monopoly on the World Bank president’s post and the European Union on that of the IMF head. Together, the US and Europe have a majority share of voting rights in the two multilateral banks. So, a Brics candidate is unlikely to defeat a joint US-Europe candidate without a compromise being struck.

The possible US candidates include secretary of state Hillary Clinton, former treasury secretary Lawrence Summers, and the American ambassador to the UN, Susan Rice.