AIIB : Analysis of 2 years


  • AIIB completed 2 years
  • Third annual meeting of the board of governors of AIIB is scheduled to be held in Mumbai in June



  • India is the AIIB’s second-largest shareholder(with 8% voting share in AIIB) and is also a major recipient of loans from the bank
  • At the launch of the AIIB, there were 57 prospective founding members (including India) and 20 from outside the region (including France Germany, Italy and the UK)
  • The membership stands at 84 as of end 2017 (the US and Japan being notably absent)
  • It was reasonable to expect that the creation of the AIIB would be a welcome initiative to plug Asia’s monumental infrastructural deficit
  • A study by the Asian Development Bank (ADB) in 2017 estimated the Asia-Pacific region’s infrastructural needs at around $22.5 trillion over 15 years (to 2030) or about $1.5 trillion annually
  • There were suspicions in some quarters about the long-term aims and intentions of the AIIB
  • This was partly to do with the fact that the AIIB project was first announced in October 2013 simultaneously with the Silk Road Economic Belt and Maritime Silk Road initiatives
  • The initial scepticism was therefore that the AIIB was primarily a vehicle to fund BRI-related projects to promote connectivity in Asia as well as to further China’s strategic goals
  • The AIIB was thus initially considered China’s World Bank, i.e. a so-called “Beijing Woods” moment
  • It should be noted that China is the AIIB’s single largest contributor and holds around 28% voting share, giving it veto power over major decisions at the AIIB
  • However, the AIIB is evolving towards being a truly collective institution
  • Several other AIIB-funded projects that have been approved have no obvious connection to the BRI
  • Also, the BRI is largely funded separately via bilateral lending from the Silk Road Fund and two Chinese policy banks (China Development Bank and EXIM Bank of China)
  • There is therefore a clear difference between the AIIB and other China-specific financial entities.
  • India was the single-largest borrower from the AIIB in 2017, with part of the Bengaluru Metro line and Gujarat rural roads each being granted around $330 million loans
  • As of end 2017, AIIB had granted just over $1 billion worth of loans for various infrastructure projects in India
  • Besides these, financing for another $1.2 billion worth of projects from India has been proposed
  • Therefore, there is very less suspicion: The fact that India has become an important recipient of AIIB loans is noteworthy and indicates the degree of independence of the AIIB from the BRI
  • The current working of the AIIB is looking as though it will complement rather than compete with the work of existing MDBs such as the ADB and World Bank
  • In fact, more than half of the AIIB loans to date have been co-financed with other Multilateral Development banks.




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