AIIB - Asian Infrastructure Investment Bank

By : Neha Dhyani

Updated : Mar 10, 2022, 8:53

The Asian Infrastructure Investment Bank (AIIB) is a multilateral development bank that was established in 2015 through the AIIB Articles of Agreement, a multilateral treaty, and came into operation in 2016. The primary purpose of this bank is to strengthen social and economic outcomes in Asia and link up resources, marketplaces, services and people by investing in sustainable infrastructure and other areas of the economy.

The AIIB headquarters are present in Beijing, China, and the Asian continent accounts for the largest share of the bank's operations.

AIIB Significance

AIIB prioritizes investments in long-term infrastructure and development initiatives. Starting with 57 founding members, the bank today has 105 approved members. The list also includes fourteen G20 nations like the United Kingdom, Italy, France, Germany, etc.

Asian Infrastructure Investment Bank Objectives

  • To function in close collaboration with other bilateral and multilateral development institutions to promote regional coordination and alliance in acknowledging operational challenges.
  • To invest in strategically significant infrastructure and other industrial projects, thus helping Asia achieve long-term economic development, wealth creation, and improved infrastructure connectivity.
  • To harness the available resources to fund regional development, including those plans and initiatives that would make significant contributions to the region's holistic economic progress.
  • To encourage public and private capital investment for development reasons, primarily in infrastructure and other productive areas.
  • To stimulate private investment in ventures, industries, projects and activities that contribute to regional economic development when private capital is not obtainable on acceptable contractual terms.

Structure and Governance of AIIB

  • The President of the AIIB gets elected by AIIB shareholders for a five-year term and is eligible for re-election once.
  • The Bank has an International Advisory Panel (IAP) set up to advise the President and senior management on the Bank's plans and policies, as well as general operating concerns.
  • One Governor and Alternate Governor must be appointed by each member country. The Asian Infrastructure Investment Bank's appointed Governors enjoy all primary authority and powers.
  • The Bank's administrative operations are directed by the Non-resident Board of Directors, who exercise all authorities handed by the Board of Governors.
  • China is the largest shareholder in the bank (26.6%), followed by India, Russia, and Germany in terms of voting rights.

Contributions of the AIIB

India is the bank's second-largest stakeholder (7.6%), trailing only China. India is by far the most prominent beneficiary of the AIIB infrastructure financing. Several projects in India have received approval from the Asian Infrastructure Investment Bank:

  • Bangalore Metro Rail Project (USD 335 million)
  • Transmission System Strengthening Project
  • Project MMGSY (Gujarat Rural Roads, USD 329 million)
  • India Infrastructure Fund
  • Power For All project (Andhra Pradesh)
  • COVID-19 Emergency Response Fund and Health Systems Preparedness Project (USD 500 million)

The Asian Infrastructure Investment Bank is still in its developmental stages and must be fostered with democratic ideals to avoid single-country domination (as the AIIB headquarters are situated in Beijing, China).

As an emerging power, India can play a critical role in shaping the AIIB's basis for the benefit of underprivileged sections across the globe in developing countries.

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Q.1. Who is currently serving as the president of the Asian Infrastructure Investment Bank?

The bank is led by Jin Liqun, the former Chinese vice-minister of finance.

Q.2. Can non-Asian countries join the Asian Infrastructure Investment Bank as a member?

Yes. All World Bank and Asian Development Bank members are eligible to join. Non-regional members are those who are not from Asia or Oceania.

Q.3. What is India's shareholding in the Asian Infrastructure Investment Bank?

India holds 7.6% of the voting shares in the bank, which is the second-largest shareholding after China.

Q.4. Where are the AIIB headquarters located?

The Asian Infrastructure Investment Bank is headquartered in Beijing, China.