Context: Recently, the Asian Infrastructure Investment Bank (AIIB) has approved a $750 million loan to India to strengthen the country’s battle against the adverse impact of Covid-19 pandemic on poor and vulnerable households.

• Earlier, it had approved $500 million for ‘Covid-19 Emergency Response and Health Systems Preparedness Project’ initiated by India.
• Key Points
• $750 million loan: It is co-financed by the AIIB and the Asian Development Bank.

Aim:

• It aims to ensure economic resilience to prevent long-term damage to productive capacity, including human capital.
• The support will go towards bolstering economic aid for businesses, including for the informal sector, expanding social safety nets for the needy, and strengthening the country’s health care systems.

Loan by AIIB to India:

• AIIB’s sovereign loans to India amounts to $3.06 billion.
• The current loan will be the second for India under AIIB’s Covid-19 Crisis Recovery Facility.
• The Crisis Recovery Facility has been formed in response to urgent economic, financial and public health pressures and to support a quick recovery after the current crisis (Covid-19).
• It will offer $5-10 billion of financing to public and private entities over 18 months i.e. from April 2020 to October 2021.
• The funding is done either with the World Bank or ADB.

Loan by ADB to India:

• It has assured Indian government of $2.2 billion support to fight against the Covid-19 pandemic.
• Earlier, it had provided a $1.5 billion loan to India.

About Asian Infrastructure Investment Bank

• It is a multilateral development bank with a mission to improve social and economic outcomes in Asia and beyond.
• It is headquartered in Beijing.
• It commenced operations in January 2016.
• By investing in sustainable infrastructure and other productive sectors today, it aims to connect people, services and markets that over time will impact the lives of billions and build a better future.

Various organs of AIIB:

• Board of Governors: The Board of Governors consists of one Governor and one Alternate Governor appointed by each member country. Governors and Alternate Governors serve at the pleasure of the appointing member.
• Board of Directors: Non-resident Board of Directors is responsible for the direction of the Bank’s general operations, exercising all powers delegated to it by the Board of Governors. This includes approving the Bank’s strategy, annual plan and budget; establishing policies; taking decisions concerning Bank operations; and supervising management and operation of the Bank and establishing an oversight mechanism.
• International Advisory Panel: The Bank has established an International Advisory Panel (IAP) to support the President and Senior Management on the Bank’s strategies and policies as well as on general operational issues. The Panel meets in tandem with the Bank’s Annual Meeting, or as requested by the President. The President selects and appoints members of the IAP to two-year terms. Panelists receive a small honorarium and do not receive a salary. The Bank pays the costs associated with Panel meetings.

Significance of AIIB:

• The United Nations has addressed the launch of AIIB as having potential for “scaling up financing for sustainable development” for the concern of global economic governance.
• The capital of the bank is $100 billion, equivalent to 2⁄3 of the capital of the Asian Development Bank and about half that of the World Bank.