Asian Infrastructure Investment Bank (AIIB)

New Development Finance • Infrastructure Focus • Asia-Centric Ownership • India’s Strategic Location

1. Genesis, Rationale & Global Context

The Asian Infrastructure Investment Bank (AIIB) was formally established in 2016 as a multilateral development bank with the exclusive mandate of financing infrastructure and connectivity projects. It was proposed by China in 2013 to address Asia’s massive infrastructure financing deficit, estimated to run into trillions of dollars annually.

The creation of AIIB marks a significant shift in global development finance, where emerging economies have begun to design and lead new financial institutions, rather than depending solely on Western-dominated institutions such as the World Bank and IMF.

• Proposed in 2013, operational from 2016
• Headquarters in Beijing
• Mandate restricted largely to infrastructure

flowchart TB
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  A[Global Infrastructure Gap]:::a --> B[World Bank]
  A --> C[ADB]
  A --> D[AIIB – 2016]

  classDef a fill:#E3F2FD,stroke:#1E88E5,color:#0D47A1;
  classDef b fill:#E8EAF6 stroke:#3949AB color:#1A237E;

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2. Membership, Capital & Shareholding Structure

AIIB today has more than 100 approved members spanning Asia, Europe, Africa and Latin America. Unlike earlier multilateral banks, its ownership structure ensures dominant Asian control, while still allowing participation of advanced economies.

Capital Base

• Authorised capital: USD 100 billion
• Subscribed capital: Around USD 80+ billion

• India is the second-largest shareholder
• USA and Japan are not members
• Voting power = capital share + basic votes

flowchart TB
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  A[AIIB Voting Power] --> B[China – Veto]
  A --> C[India – 2nd Largest]
  A --> D[Russia]
  A --> E[Others]

  classDef b fill:#FFE0E0,stroke:#C62828,color:#7F0000;
  classDef c fill:#E8F5E9,stroke:#2E7D32,color:#1B5E20;

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3. Governance Structure

AIIB follows a lean governance structure designed to allow faster decision-making compared to older multilateral banks.

• Board of Governors: One governor from each member state
• Board of Directors: 12 directors (non-resident board model)
• President: Chief executive of the bank (traditionally from China)

4. Lending Philosophy & Operational Focus

AIIB follows an infrastructure-exclusive lending philosophy. Unlike the World Bank and ADB which operate across multiple sectors, AIIB restricts itself mainly to:

• Transport infrastructure
• Energy systems
• Urban infrastructure
• Water and sanitation

AIIB avoids intrusive macro-policy conditionalities. Instead, it prioritises: project feasibility, environmental safeguards, and long-term financial sustainability.

flowchart TB
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  A[AIIB Lending] --> B[Transport]
  A --> C[Energy]
  A --> D[Urban Infra]
  A --> E[Water & Sanitation]

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5. AIIB & India – Strategic Partnership

India is a founding member of AIIB and currently its second-largest shareholder and largest borrower. This reflects the central role of AIIB in financing India’s urbanisation, clean energy transition and logistics modernisation.

flowchart TB
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  A[AIIB Capital] --> B[India]
  B --> C[Metro Rail]
  B --> D[Renewable Energy]
  B --> E[Urban Water]
  C --> F[Economic Productivity]
  D --> F
  E --> F

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6. Comparative Positioning of AIIB

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