Study Notes: Banking and Finance

The Asian
Infrastructure Investment Bank

The Asian Infrastructure Investment Bank (AIIB) is a
multilateral development bank (MDB) conceived for the 21st century. The Bank’s
foundation is built on the lessons of experience of existing MDBs and the
private sector. Its modus operandi will be lean, clean and green:

Lean– with a small efficient management team and highly
skilled staff;

Clean- an ethical organization with zero tolerance for
corruption;

Green– an institution built on respect for the environment.

The AIIB, a modern knowledge-based institution, will focus
on the development of infrastructure and other productive sectors in Asia,
including energy and power, transportation and telecommunications, rural
infrastructure and agriculture development, water supply and sanitation,
environmental protection, urban development and logistics, etc.

The AIIB will complement and cooperate with the existing
MDBs to jointly address the daunting infrastructure needs in Asia. AIIB
welcomes all regional and non-regional countries, developing and developed
countries, that seek to contribute to Asian infrastructure development and
regional connectivity.

Headquarters– Beijing,
China

Official language
– English

President– Jin
Liqun

Main organ– Board
of Governors
                        Board of Directors

HISTORY

Representatives from 22 countries signed the October 2014
Memorandum of Understanding (MOU) to establish the AIIB and Beijing was
selected to host Bank headquarters. Mr. Jin Liqun was appointed as the
Secretary General of the Multilateral Interim Secretariat. By the deadline of
March 31st for submission of membership applications, the Prospective Founding Members had increased to 57.
The bank started operation after the agreement entered into force on 25 December 2015.

Major economies that did not become PFM (Prospective
Founding Members) include the G7/G8 members’ Japan and the United States

Share Holders

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.

Asian countries will contribute up to 75 per cent of the total capital and be allocated a share of the
quota based on their economic size.

BRICS members China,
India and Russia are the three largest shareholders, with a voting share of
26.06 per cent, 7.5 per cent and 5.92 per cent, respectively.

Current News about
AIIB

– AIIB 1st Annual Meeting to be held in Beijing on June 25-26, 2016.

– Asian
Infrastructure Investment Bank and European
Investment Bank agree to strengthen cooperation

-The Asian Infrastructure Investment Bank’s Board of
Directors approved its first 4 loans
totaling $509 million to finance 4 projects. Three of the 4 projects are
co-financing operations with multilateral development bank (MDB) partners. The
approved loans are:

$165 million loan for a Power Distribution System Upgrade
and Expansion Project in Bangladesh;

$216.5 million loan for a National Slum Upgrading Project in Indonesia, expected to be co-financed with the
World Bank;

$100 million loan to finance the Shorkot-Khanewal Section of
National Motorway M-4 in Pakistan,
co-financed with the Asian Development Bank (ADB) and the United Kingdom’s
Department for International Development (DFID); and

$ 27.5 million loan for the Dushanbe-Uzbekistan Border Road Improvement Project in Tajikistan,
co-financed with the European Bank for Reconstruction and Development (EBRD).

– Former IAS officer DJ
Pandian has been appointed as vice
president and CIO of AIIB

– India’s Dinesh Sharma has been elected to the
board of directors of the Asian Infrastructure Investment Bank (AIIB). He has
been elected to the 12-member board through a secret ballot. This is the first
board of directors of AIIB.

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