India, 20 others set up Asian Infrastructure Investment Bank

India along with 20 other countries today signed an agreement to become founding members of the China-backed...

Beijing | Published:October 24, 2014 2:05 pm

India along with 20 other countries today signed an agreement to become founding members of the China-backed Asian Infrastructure Investment Bank (AIIB) to aid the infrastructure development in the Asian region and reduce the dependence on Western-dominated World Bank and IMF.

Usha Titus, Joint Secretary, Economic Affairs division of the Ministry of Finance, signed the MoU on behalf of India at a special ceremony here at the Great Hall of the People.

China’s Vice Finance Minister Jin Liqun, who was also the former Vice-President of the Asian Development Bank, has been appointed as the Secretary General of AIIB.

The Bank, to be headquartered in Beijing, is expected to be operational by next year.

The MoU specifies that the authorised capital of AIIB is USD 100 billion and the initial subscribed capital is expected to be around USD 50 billion. The paid-in ratio will be 20 per cent.

Voting rights are to be decided after consultations among the members over fixing the bench marks which were expected to be combination of GDP and Purchasing Power Parity (PPP).

Based on this formula, India will be second largest share holder of the bank after China.

Elaborating on decision to participate in AIIB, Titus said India’s view is that the new bank provides rich resource capital base for infrastructure financing, which is good for the regional development.

It will help to bridge the infrastructure deficit by playing a complimentary role along with other financial institutions like ADP and IMF and work for good governance, she told PTI.

Chinese Foreign Ministry spokesperson Hua Chua Chunying yesterday welcomed India’s participation in new bank.

China regards India’s support as a major boost to the bank’s formation which was largely seen as an effort to enlarge funding for the Asian countries reducing the dependence on ADB and other Western-dominated global financial institutions like World Bank and IMF.

China was keen about India’s participation and an invitation in this regard was extended by Chinese President Xi Jinping during his first meeting with Prime Minister Narendra Modi on the sidelines of BRICS summit in Brazil in July.

The AIIB is in addition to the BRICS (Brazil, Russia, India, China and South Africa) Development Bank formed this year, which will be based in Shanghai. It is set to commence its operations with an Indian as its President.

Besides India and China, other AIIB members are Vietnam, Uzbekistan, Thailand, Sri Lanka, Singapore, Qatar, Oman, the Philippines, Pakistan, Nepal, Bangladesh, Brunei, Cambodia, Kazakhstan, Kuwait, Lao PDR, Malaysia, Mongolia and Myanmar.

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  1. K
    kris kumar
    Oct 24, 2014 at 6:23 pm
    Most of the countries are either poor or at developing stage and there will be a big demands from these countries for a cheaper loan. The limited funds will have its own limitation and let us see how the fund is distributed. Pak will be the first to beg.
    Reply
  2. D
    DAVID DAWSON
    Oct 29, 2014 at 6:35 am
    Dollar rate will reduce and america is finished. That is why they did not want this bank to even get started. In all honesty, Americans would have started a war .. like they usually do in Iraq or Libya because of commercial interests. But China is too hard for them to fight against .. and Americans lost their image because of the joining up of a total of 21 countries to form this bank. So they can't stop this from happening. The last thing left to say is .. Goodbye America forever and finally good riddance. Nobody wants you anymore.
    Reply
    1. D
      Dont_be_paranoid
      Oct 28, 2014 at 4:14 pm
      Please do not showcase national antagonism in your comments. Each of the countries, including India are extremely poor, so singling out just one country shows extreme animosity.
      Reply
      1. D
        Dont_be_paranoid
        Oct 28, 2014 at 4:14 pm
        Please do not showcase national antagonism in your comments. Each of the countries, including India are extremely poor, so singling out just one country shows extreme animosity.
        Reply
        1. A
          Alam
          Oct 25, 2014 at 2:33 pm
          Don't worry about stan. India will will buckle soon under US pressure as they did in IPI gas pipeline and even voted against Iran in UN voting for sanctions on Iia itself poor country will not contribute. All amount USD.50 billion will be contributed by China only
          Reply
          1. C
            Citizen
            Oct 24, 2014 at 1:56 pm
            A good move for the region hope It would provide much needed capital on equal basis for all the members as per their rules. Jaihind
            Reply
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