The Brics countries – Brazil, Russia, India, China and South Africa – made the announcement following a summit in Durban, South Afrika.
South African Foreign Minister Pravin Gordhan said there were “different views” as to how much capital would be needed to fund their £3 trillion development plans.
He said £33 billion had been mentioned, with each state putting up an equal share of that figure.
The development bank will be the first institution set up by the until-now relatively informal group of growing economies.
The bank was first mooted a year ago when finance minsters were encouraged to explore its feasibility, but Russian Deputy Foreign Minister Sergey Ryabkov suggested the announcement may be premature.
“We are not contesting the idea, we support it, we favour it, but we are urging everyone to be serious enough to make further efforts in order to create the right foundation,” he said.
Russia has also urged that the development bank operate on “market principles,” which may put it on a collision with more left-minded governments in some Brics states.
The bank would set up a “contingent reserve arrangement” to cushion them against future financial crises and lesson the reliance on Western financial institutions, South African President Jacob Zuma said.
The fifth Brics summit – the first held in South Africa, rounding of the first round of meetings – placed special emphasis on development in Africa.
New Chinese President Xi Jinping said his country would “intensify, not weaken” its relationship with the continent and told the summit China would “support Africa’s efforts for stronger growth.”
China has overtaken the former colonial powers as the biggest trading partner in Africa.
The summit affirmed its commitment to a Syrian-led political process to overcome the crisis in the country following a letter from President Bashar al-Assad branding the opposition forces Western-backed terrorists.
The countries called on all parties to “allow and facilitate immediate, safe, full and unimpeded access to humanitarian organisations.”