21 Asian countries sign MoU for Asian Infrastructure Investment Bank (AIIB)
21 Asian countries, including India, have signed an agreement to become the founding members of the Asian Infrastructure Investment Bank (AIIB). China’s Vice-Finance Minister Jin Liqun, who has also been the Vice-President of the Asian Development Bank (ADB), was appointed the Secretary General of AIIB.
China has been keen to ensure India’s participation in the AIIB, and the Chinese President Jinping also pushed for it when met PM Modi on the sidelines of the BRICS Summit in July. The AIIB is in addition to the BRICS Development Bank which was also formed recently. Te BRICS Development will be located in Shanghai, and will begin operating with an Indian as its President.
The Joint Secretary of the Economic Affairs division of the Ministry of Finance signed the MoU on behalf of India at Beijing. The Joint Secretary said that the new bank will function as a rich resource base for capital for infrastructure financing, and thereby provide an impetus to regional development by playing a complementary role to multilateral agencies such as the ADB and IMF.
Voting rights of the different countries will be decided after consultations among the members over fixing the bench marks which are expected to be a combination of GDP and PPP. If such a formula is finalized, India will be the second largest share holder of AIIB after China.
AIIB is an international financial institution that was proposed by China. It is expected to act as a balance of power with the WB, IMF and ADB all being controlled/dominated by the US, EU and Japan respectively.
The Headquarters of the AIIB will be at Beijing, and the bank is expected to be operational in 2015.
According to the agreement, the authorised capital of AIIB is US $100 bn and the initial subscribed capital is expected to be around US $50 bn. The paid-in ratio will be 20%.
The 21 members of the AIIB are China, India, Thailand, Malaysia, Singapore, the Philippines, Pakistan, Bangladesh, Brunei, Cambodia, Kazakhstan, Kuwait, Laos, Myanmar, Mongolia, Nepal, Oman, Qatar, Sri Lanka, Uzbekistan, and Vietnam.