The Asian Infrastructure Investment Bank (AIIB) is a multilateral development bank. The mission of AIIB is to improve social and economic outcomes in Asia. It entered into force on December 15, 2015 by the AIIB Articles of Agreement and opened for business on January 16, 2016. The members of AIIB have now grown to 102 members worldwide out of which 26 are prospective members. It is headquartered in Beijing, China. It is headed by the President of AIIB Jin Liqin. The initial capital of AIIB was USD 100 billion which is divided into 1 million shares of 100,000 dollars each. The capital is equivalent to two third of the ADB (Asian Development Bank) and about half of World Bank. The largest contributor is China, with a contribution of USD 50 billion followed by India, USD 8.4 billion. The goal of the bank is to stimulate sustainable development by investing in infrastructure and productive sectors, to encourage regional cooperation and partnership by working in collaboration with other multilateral and bilateral development institutions and to foster investment in public and private capital for infrastructure development.
The Main Organ of AIIB: Board of Governors and Board of Directors.
Board of Governors:
The Board of Governors consists of 1 Governor and 1 Alternate Governor appointed by the members’ country. Both Governors serve at the pleasure of the appointing member. Board of governors is entitled to have all the powers in the bank. The first AIIB Board of Governors meeting was held at Beijing, china in 2016. The recent AIIB annual meeting was held at Luxemburg in July 12-13, 2019. This was the first meeting of AIIB held outside Asia. The theme of the meeting was “Cooperation and Connectivity”.
Board of Directors:
The Board of Directors consist of 12 members. The members of Board of directors shall not be the members of Board of Governors. The members of Board of Directors are elected by the governors, nine of which represents regional members and three represent non-regional members.
Persons of high competence in economic and financial matters are elected as Directors of the Board. To reduce the operating cost, the Board of directors remained as a non-resident board. It exercise all the powers assign to it by the Board of Governors, some of it includes:
- Supervision of operation and management of the bank.
- Establishing an oversight mechanism.
- Initiate polices of the bank.
- Approve the Bank’s strategy, Budget and Annual plan.
- Take decision that concerns bank operations.
What a Board of Directors cannot do?
Board of governors can transfer all the powers to the board of directors except some. Those are:
- Amend the ‘AIIB Articles of Agreement’.
- Admit new members.
- Elect members of the Board of directors.
- Elect the President.
- Review the auditor’s report.
President of AIIB:
The AIIB head is Jim Liquin. President is the head staff of AIIB and is elected by AIIB Shareholders. The tenure length of President is 5 years. The President is eligible for reelection once. President is a part of Senior Management which also includes five Vice Presidents. President and Vice Presidents are responsible for:
- Strategy, Policy.
- Finance, Investment Operations
- Administration and the General Counsel.
An International Advisory Panel (IAP) has been established to support the Senior Management. The works includes making strategies, Policies as well as the General operations issues. It is the president who appoints the members of IAP for an initial term of 2 years which can be renewed after completion.
The Governance structure of AIIB is same as the other Multilateral Development Bank (MDB) except two things i.e. it doesn’t have a resident Board of Executive Directors and decision authority is given more to the regional members.
Being the largest contributor to the bank, China holds the largest shares in the bank i.e. 26.75 % (as on January 17, 2020) followed by India which has 7.66% shares. Majority of the voting powers hold by the regional members of the bank i.e. 75%.
AIIB and India
India hosted AIIB third annual meeting, 2018 in Mumbai. The theme of the annual meeting was “Mobilizing finance for Infrastructure: Innovation and Collaboration”. The largest beneficiary of AIIB is India. There are mainly five projects that have been approved by AIIB till now. The total loan that has been sanctioned to these five projects is USD 1.074 billion. Those are the following
- Transmission System Strengthening Project
- Gujrat Rural Roads (MMGSY project) USD 329 million.
- India Infrastructure Bond.
- Andhra Pradesh 24X7- Power for all Project (USD 455 million).
- Bangalore Metro Rail Project (USB 335 million).