AIIB Loan for India

• 18 Jun 2020

Why in News

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.

Asian Infrastructure Investment Bank

• The Asian Infrastructure Investment Bank (AIIB) is a multilateral development bank with a mission to improve social and economic outcomes in Asia.
• It is established by the AIIB Articles of Agreement (entered into force 25^th December 2015) which is a multilateral treaty.
• Headquarters: Beijing, China
• Members:
  
  • 102 members.
  • India joined AIIB in 2016 as a regional member of the Bank.
  • Further, fourteen of the G-20 nations are AIIB members including France, Germany, Italy and the United Kingdom.
• China is the largest shareholder in AIIB with a 26.06% voting power, followed by India with a 7.62% voting power.

Asian Development Bank

• ADB is a regional development bank established on 19th December 1966.
• Headquarters: Manila, Philippines.
• Members:
  
  • It has 68 members, 49 from within Asia.
  • India is a founding member.
• As of 31 December 2019, ADB’s five largest shareholders are Japan and the United States (each with 15.6% of total shares), the People’s Republic of China (6.4%), India (6.3%), and Australia (5.8%).
• It is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty.

Source: IE