Asian Infrastructure Investment Bank (AIIB) | 10 Jan 2022

Why in News

Recently, former Reserve Bank of India (RBI) governor Urjit Patel has been appointed vice-president of the Beijing-based Asian Infrastructure Investment Bank (AIIB).

• In October 2021, the Union Minister of Finance participated in the 6^th Annual Meeting of the Board of Governors of AIIB.

Key Points

• About:
  • It is a multilateral development bank with a mission to improve social and economic outcomes in Asia.
  • It aims to connect people, services and markets that over time will impact the lives of billions and build a better future by investing in sustainable infrastructure and other productive sectors.
  • It is established by the AIIB Articles of Agreement (entered into force December 2015) which is a multilateral treaty.
  • It is headquartered in Beijing (China) and began its operations in January 2016.
• 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.
  • Senior Management:
    • AIIB staff is headed by the President who is elected by AIIB shareholders for a five-year term and eligible for reelection once.
  • 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.
• Key Accomplishments of AIIB:
  • Rapid Growth in Worldwide Membership:
    • AIIB began operations in 2016 with 57 founding Members (37 regional and 20 non regional). By the end of 2020, it had 103 approved Members representing approximately 79% of the global population and 65% of global GDP.
  • Highest Credit Rating Assigned by Three Major Rating Institutions:
    • Since 2017, AIIB has received AAA ratings with a stable outlook from the top credit rating agencies— Standard & Poor’s, Moody’s and Fitch.
    • Industry recognition of its sound financial standing has enabled it to expand its presence in international capital markets.
  • Permanent Observer Status in the United Nations:
    • In 2018, AIIB was granted Permanent Observer status in the deliberations of both the United Nations General Assembly and the Economic and Social Council, the two development-focused principal organs of the global body.
  • Governance Model Enhancing Efficiency and Accountability:
    • AIIB has created an effective environment for its Board of Directors to take a strategic approach to direct and oversee the work of an accountable management.
    • The Bank’s Accountability Framework is an innovative governance model that positions AIIB to embed a culture of accountability throughout the organization.
  • Policies and Strategies Developed or Finalized:
    • Strategies for all major infrastructure sectors and for investing in equity, mobilizing private capital and financing operations in non regional members have all been approved and being implemented.
• AIIB and India:
  • The AIIB has approved more loans for India than any other member of the bank.
    • China is its biggest shareholder and India is the second-largest.
  • The AIIB has funded 28 projects in India amounting to USD6.7 billion.
  • It has recently emphasised green projects and supporting public health initiatives during the Covid-19 pandemic, besides infrastructure.
  • In October 2021, India applied for loans from the AIIB and Asian Development Bank (ADB) to procure 667 million doses of Covid-19 vaccines with the ADB expected to lend USD1.5 billion and the AIIB around USD500 million, under the ADB’s Asia Pacific Vaccine Access Facility (APVAX) initiative.
  • Last year (2021), the AIIB also approved a USD356.67 million loan to the Indian government to support the expansion of the Chennai metro rail system.

Source: TH