The China-led Asian Infrastructure Investment Bank (AIIB) was inaugurated by President Xi Jinping on Saturday amid hope that it will streamline infrastructure investments across the continent.
Based in Beijing, the bank aims to disburse $1.2 billion in 2016 of which at least half, around $600 million, is expected to be pumped into infrastructure projects in India. New Delhi has already submitted a list of infrastructure projects it wants the AIIB to fund across sectors like power, drinking water and roads.
Experts have speculated that the AIIB with an authorised capital of $100 billion was China’s effort to rival the International Monetary Fund, the World Bank and the Asian Development Bank. As of now, 57 countries including Germany, UK, Russia and South Korea have joined since the memorandum of understanding (MoU) was signed in October, 2014 with only 19 members.
Chinese finance minister Lou Jiwei was elected as the first chairman of the AIIB council and former ADB vice-president Jin Liqun was elected as the first AIIB president. While China, with 26.06% voting shares, remains the strongest, India has 7.51% voting shares is the second largest shareholder followed by Russia with 5.93% voting shares.
In real terms, India has pledged to pay $8.37 billion, 20% of the paid-up capital, which is to be paid in five instalments. Till now, New Delhi has put in $334.7 billion. Explaining India’s role in the China-led bank, Dinesh Sharma, additional secretary, said New Delhi has been with China on the bank from the beginning.
He added that India asked but did not insist on getting the vice-president’s post, despite being the second largest share holder.
Sharma indicated that the AIIB will function parallel to the BRICS’ New Development Bank (NDB), headed by veteran Indian banker KV Kamath.
“The NDB is also doing well. There are informal structural linkages between the two. While the AIIB is for Asia, the NDB is not limited to Asia. So chances are the AIIB could be partner of the NDB in Asia and the NDB could be complementary to the World Bank,” he said.