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Asian Infrastructure Investment Bank (AIIB)

Topics Covered: Important International institutions, agencies and fora, their structure, mandate.

Asian Infrastructure Investment Bank (AIIB):


Context:

Government of India, the Government of Maharashtra, Mumbai Railway Vikas Corporation and the Asian Infrastructure Investment Bank (AIIB) have signed a loan agreement for a $500 million Mumbai Urban Transport Project-III to improve the network capacity, service quality and safety of the suburban railway system in Mumbai.

What is AIIB?

Asian Infrastructure Investment Bank (AIIB) is a multilateral development bank with a mission to improve social and economic outcomes in Asia and beyond.

  • It is headquartered in Beijing.
  • It commenced operations in January 2016.
  • It is a development bank with a mission to improve the economic and social outcomes in Asia.

Is AIIB actively recruiting new members?

AIIB is an open and inclusive multilateral financial institution.

  • Membership in AIIB shall be open to members of the International Bank for Reconstruction and Development or the Asian Development Bank.

Unlike other MDBs (multilateral development bank), the AIIB allows for non-sovereign entities to apply for AIIB membership, assuming their home country is a member.

AIIB Project Preparation Special Fund:

  • Established in June 2016, the Project Preparation Special Fund (Special Fund) is a multidonor facility with the primary purpose of supporting eligible AIIB members—especially low-income members—prepare bankable infrastructure projects AIIB may finance.
  • The Special Fund provides technical assistance grants for preparing bankable infrastructure projects. Through these grants, clients can hire experts and consultants to carry out the required preparation work.

Various organs of AIIB:

Board of Governors: The Board of Governors consists of one Governor and one Alternate Governor appointed by each member country. Governors and Alternate Governors serve at the pleasure of the appointing member.

Board of Directors: Non-resident Board of Directors is responsible for the direction of the Bank’s general operations, exercising all powers delegated to it by the Board of Governors. This includes approving the Bank’s strategy, annual plan and budget; establishing policies; taking decisions concerning Bank operations; and supervising management and operation of the Bank and establishing an oversight mechanism.

International Advisory Panel: The Bank has established an International Advisory Panel (IAP) to support the President and Senior Management on the Bank’s strategies and policies as well as on general operational issues. The Panel meets in tandem with the Bank’s Annual Meeting, or as requested by the President. The President selects and appoints members of the IAP to two-year terms. Panelists receive a small honorarium and do not receive a salary. The Bank pays the costs associated with Panel meetings.

Significance of AIIB:

The United Nations has addressed the launch of AIIB as having potential for “scaling up financing for sustainable development” for the concern of global economic governance. The capital of the bank is $100 billion, equivalent to ​2⁄3 of the capital of the Asian Development Bank and about half that of the World Bank.

InstaLinks:

Prelims Link:

  1. AIIB vs ADB vs WB.
  2. Members of AIIB.
  3. Top shareholders.
  4. Voting powers.
  5. AIIB supported projects in India.

Mains Link:

Write a note on the Asian Infrastructure Investment Bank (AIIB).

Sources: pib.