The Asian Infrastructure Investment Bank (AIIB) is an international development bank focused on improving Asia's economic and social outcomes. It has its headquarters in Beijing. As of February 2022, AIIB has 105 members. It is a crucial topic in the Economy syllabus for the UPSC Examination. The article below briefs the Asian Infrastructure Investment Bank followed by detailed explanations.

Asian Infrastructure Investment Bank

What is AIIB?

• The Asian Infrastructure Investment Bank (AIIB) is an international development bank to improve Asia's social and economic conditions.
• It is governed under the AIIB Articles of Agreement, a multinational treaty that went into effect on December 25, 2015. The Bank's Membership is made up of the parties to the agreement (57 founding members).
• It was founded in January 2016 and has its headquarters in Beijing.

Aim

• By investing in sustainable infrastructure and other productive sectors in Asia and beyond, it plans to improve the connectivity of people, services, and markets, affecting the lives of billions and paving the way for a better future.
• Working in close collaboration with other multilateral and bilateral development agencies to foster regional cooperation and partnership in solving development concerns.
• To encourage public and private capital investment for development reasons, particularly in infrastructure and other productive areas.
• To use the resources at its disposal to fund regional development, particularly those initiatives and programs that will most effectively contribute to the region's harmonious economic progress;
• When private capital is not available on acceptable terms and conditions, it stimulates private investment in projects, enterprises, and activities that contribute to regional economic development.

Membership

• The bank presently has 105 members, with 16 new members on the way from all across the world.
• Armenia, Lebanon, Brazil, South Africa, Greece, and others are among the 27 potential members.
• France, Germany, Italy, and the United Kingdom are among the 14 G-20 countries that are members of the AIIB.

Members of AIIB

Governance

• The Board of Governors, the bank's highest decision-making body, is at the apex of its governance system.
• It is made up of one governor from each of the bank's member states and meets once a year in principle.
• The board of directors, which is made up of 12 governors who each represent one or more members, is in charge of the daily operations and tasks that the board of governors has given it.
• Nine of the members are from the Asia-Pacific area, with three representing members from other parts of the world.
• One constituency of non-regional directors is made up of EU member states that use the Euro as their currency, while another is made up of other European countries.
• New members are only considered for membership once a year.

Key Accomplishments

1. Booming Growth in Worldwide Membership

• The AIIB was founded in 2016 with 57 initial members (37 regional and 20 non-regional).
• It has 103 approved Members by the end of 2020, representing roughly 79% of the global population and 65% of global GDP.

2. Highest Credit Rating Assessed by Three Major Rating Institutions

• The top credit rating agencies, Standard & Poor's, Moody's, and Fitch, have all given AIIB AAA ratings with a stable outlook since 2017.
• It has been able to increase its presence in foreign capital markets as a result of the industry's acknowledgment of its good financial status.

3. Permanent Observer Status in the United Nations

• In 2018, AIIB was given Permanent Observer status in both the United Nations General Assembly and the United Nations Economic and Social Council, the world body's two development-focused major organs.

4. Governance Model Enhancing Efficiency and Accountability

• The AIIB has developed an atmosphere that allows its Board of Directors to take a strategic approach to direct and oversee the activities of accountable management.
• The Bank's Accountability Framework is a cutting-edge governance architecture that enables AIIB to instill a culture of accountability throughout the board.

5. Policies and Strategies Developed or Successfully Completed

• All key infrastructure sectors' strategies, as well as those for investing in equity, mobilizing private capital, and funding activities in non-regional members, have been authorized and are in the process of being executed.

AIIB and India

• India has received more loans from the AIIB than any other country.
• China is the company's largest stakeholder, followed by India.
• The AIIB has invested USD6.7 billion in 28 projects in India.
• Apart from infrastructure, it has recently emphasized green projects and assisted public health activities during the Covid-19 pandemic.
• Under the ADB's Asia Pacific Vaccine Access Facility (APVAX) project, India requested financing from the AIIB and Asian Development Bank (ADB) in October 2021 to purchase 667 million doses of Covid-19 vaccines, with the ADB lending USD1.5 billion and the AIIB lending roughly USD500 million.
• The AIIB also approved a USD356.67 million loan to the Indian government last year (2021) to help fund the expansion of the Chennai metro rail system.

Significance

• The AIIB is more representative of the South and offers developing countries a greater voice.
• At least 75% of the share votes are reserved for Asia-Pacific countries.
• This gives smaller Asian countries a voice that they don't have in other multinational institutions.

Conclusion

The AIIB is still in its nascent stage. The AIIB is gaining popularity day by day. The AIIB intends to enhance Asian infrastructure capacities, given that connectedness is the new mantra in contemporary Asian regionalism. However, the scope of the initiative should be expanded beyond giving cash for individual countries' infrastructure development to assisting them in increasing connectivity at the sub-regional, regional, and inter-regional levels.