India was among the 50 founding countries that signed an agreement today providing the legal framework for the China-led USD 100 billion multilateral Asian Infrastructure Investment Bank (AIIB) which is being seen as a rival to the US and Europe-dominated banking institutions.
The 60-article agreement specified each member’s share as well as governance structure and policy-making mechanism of the bank, which is designed to finance infrastructure in Asia.
The delegates from 50 founding countries gathered at the Great Hall of the People for the signing ceremony. Australia was the first country to sign the agreement, followed by 49 other members. Seven more countries are due to sign by the end of the year after due approval from their respective national legislatures.
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.
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. 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.
The AIIB is designed to finance infrastructure construction in the continent. The AIIB, which will have billions of dollars to lend, is expected to go into operation later this year.
57 Prospective Founding Member countries including Pakistan gathered for the ceremony today while 50 countries signed the Articles of Agreement. A number of Finance Ministers from different countries were present at the ceremony and later met Chinese President Xi Jinping.
India had a low-key representation at the signing ceremony contrary to speculation that Finance Minister Arun Jaitley may visit China to attend the ceremony. Indian Ambassador to China Ashok K Kantha signed the agreement.
While a number of Western and European countries, including Australia, Germany and France have joined the Bank, the US and Japan have stayed away citing reservations about its openness. The AIIB is seen as a rival to the World Bank and Asian Development Bank.
Terming the agreement as a historic step forward in building the China-initiated multilateral bank, Xi said, “The signing of the document reveals the commitment of the parties involved in the founding of the AIIB, as well as their solidarity, cooperation, openness, inclusiveness and quest for common development.”