India elected to board of directors of China-backed AIIB

Beijing: India, one of the founding members of the AIIB, has been elected to the board of directors of the China-sponsored Asian Infrastructure Investment Bank which is expected to begin loan approvals before the end of this year.

Dinesh Sharma, Additional Secretary of Ministry of Finance has been elected to the 12-member board for which a secret ballot was held yesterday, Indian officials here told PTI.

This will be the first board of directors for the new bank in which 57 members joined a founding members.

Earlier former Chinese Finance Minister Jin Liqun was elected to head the bank based in Beijing after Russia withdrew its candidate.

The AIIB was formally launched by President Xi Jinping at a special function here yesterday.

The inaugural meeting of the board of the governors of the bank which concluded today has approved by-laws, rules and codes of conduct for the bank.

Finance Minister Arun Jaitley is the designated governor of the AIIB from India. Sharma who headed the Indian delegation represented Jaitley at the meeting.

With authorised capital of USD 100 billion and subscribed capital of USD 50 billion, AIIB will invest in sectors including energy, transportation, urban construction and logistics as well as education and healthcare.

China is the largest shareholder with 26.06 percent voting shares. India is the second largest shareholder with 7.5 percent followed by Russia 5.93 percent and Germany with 4.5 percent.

India whose total capital subscription amounts to USD 8.37 billion has paid first instalment of USD 334.70 million to the paid-in capital stock of the bank.

20 percent of the subscription is to be paid in five equal instalments.

The election of India to board of directors of the AIIB is expected to provide significant role for it as it is the forum that approves the loans for projects.

India's attempts to get the Vice President post by virtue of being the second largest shareholder did not materialise as the bank has decided to hire professionals for the post based on merit. 

Sharma said he is happy to lose India's argument for Vice President's post as institutions like IMF and World Bank were criticised for appointing only the officials of US and EU.

Asked why China has managed to get presidency of the AIIB, he said it was not cakewalk for Beijing as Russia fielded a candidate but later withdrew.

"Chinese could not ensure the Presidency with their shareholding. There is no insurance that China will have their president always. They have to get 50 percent others to get president post. They cannot ensure it," he said.

He also said China has no veto over the bank.

"It has been ensured that the bank has truly multilateral operational principles not a 'Chinese Exim Bank' with veto rights for China," Sharma said.

India has been with China from the beginning ever since it was mooted by Beijing in 2013, he said.

Officials say that the lending of the bank which is based in Beijing was expected to begin before the end of this year.

The New Development Bank (NDB) of the BRICS nations comprising Brazil, Russia, India, China and South Africa which is based in Shanghai was also expected to begin lending later this year. The NDB is headed by eminent banker K V Kamath.

Indian officials said the initial lending of the AIIB was expected to be around USD 1.5 billion to USD 2 billion.

The inaugural meeting has gathered 30 governors, representing over 74 percent of the AIIB's allocated capital, together with observers from the 27 signatories to the bank's articles that are still completing the membership process, state-run Xinhua news agency reported.