Q. With reference to Asian Infrastructure Investment Bank (AIIB), consider the following statements:

  1. AIIB has more than 80 member nations.
  2. India is the largest shareholder in AIIB.
  3. AIIB does not have any members from outside Asia.

Which of the statements given above is/are correct?

  • 1 only
  • 2 and 3 only
  • 1 and 3 only
  • 1, 2 and 3

Answer: (a) 1 only

AIIB
  • 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.
  • By the end of 2020, AIIB had 103 approved Members representing approximately 79% of the global population and 65% of global GDP.
  • By investing in sustainable infrastructure and other productive sectors in Asia and beyond, it will better connect people, services and markets that over time will impact the lives of billions and build a better future.
Financial Resources of AIIB
  • The AIIB’s initial total capital is USD 100 billion divided into 1 million shares of 100 000 dollars each, with 20% paid-in and 80% callable.
    • Paid-Up Share Capital: It is the amount of money that has already been paid by investors in exchange for shares of stock.
    • Called-Up Share Capital: Some companies may issue shares to investors with the understanding they will be paid at a later date.
      • This allows for more flexible investment terms and may entice investors to contribute more share capital than if they had to provide funds up front.
  • China is the largest contributor to the Bank, contributing USD 50 billion, half of the initial subscribed capital.
  • India is the second-largest shareholder, contributing USD 8.4 billion.
Voting Rights in AIIB
  • China is the largest shareholder with 26.61 % voting shares in the bank followed by India (7.6%), Russia (6.01%) and Germany (4.2 %).
  • The regional members hold 75% of the total voting power in the Bank.
  • The AIIB has a governance structure similar to other MDBs (multilateral development bank), with two key differences:
    • it does not have a resident board of executive directors that represents member countries’ interests on a day-to-day basis, and
    • the AIIB gives more decision making authority to regional countries and the largest shareholder, China.