India along with other founding countries signed an agreement providing the legal framework for the China-led USD 100 billion multilateral Asian Infrastructure Investment Bank (AIIB). The agreement specified each member’s share as well as governance structure and policy-making mechanism of the bank. Seven more countries are due to sign by the end of the year.
- The AIIB is designed to finance infrastructure construction in Asia. The AIIB, which will have billions of dollars to lend, is expected to go into operation later this year.
- Head Quarters: Beijing; Proposed by Xi Jinping in 2013.
- The AIIB will have authorised capital of USD 100 billion, and Asian countries will contribute to up to 75 per cent of the total capital. Each member will be allocated a share of the quota based on their economic size, according to the agreement.
- China, India and Russia are the three largest shareholders, taking a 30.34 per cent, 8.52 per cent, 6.66 per cent stake, respectively. Accordingly, their voting shares are calculated at 26.06 per cent, 7.5 per cent and 5.92 per cent.
- China will have 26.06 per cent of the voting rights within the multilateral institution, giving it a veto in some key decisions despite its insistence it will not have such powers.
- It is being seen as a rival to the US and Europe-dominated banking institutions namely, the World Bank and Asian Development Bank
- The US and Japan, which oppose the AIIB, are the most prominent countries not to join.
- The establishment of the new financial institution is seen as a diplomatic win for China, the world’s second largest economy.