AIIB gave a loan of $210 million to India for irrigation and solar energy projects 

🗓️ 25th December 2019

Asian Infrastructure Investment Bank (AIIB) has given a loan of $210 million to India for irrigation and solar energy projects. 

  • $145-million will be used to improve the irrigation facility and strengthen flood risk management in West Bengal and, $65-million will be used for 250 MW solar power project in Jodhpur, Rajasthan. 
  • Hero Future Energies will develop a solar project.
  • AIIB plans to increase the solar power capacity in Jodhpur to 616 MW by 2022. 

Details of Asian Infrastructure Investment Bank: 

 Established in: 2016 

Headquarters: Beijing, China 

Members: 100 

President of AIIB: Mr. Jin Liqun 

  • Asian Infrastructure Investment Bank (AIIB) is a multilateral development bank that was established with a mission to improve the social and economic scenario of Asia.
  • Headquartered in Beijing, the bank started operations in January 2016 and has now grown to 100 approved members worldwide.
  • The bank invests in sustainable infrastructure and other productive sectors in Asia and beyond that impacts the lives of billions and build a better future through better-connected servicespeople and markets.
  • 5th Annual Meeting of AIIB will be held in China on July 2-3, 2020.  

Governance of AIIB: 

  • Board of Governors is the top agencies that are responsible for decision-making.
  • Then, the Board of Directors is at the second step, which guides the general operations of the Bank, exercising all the powers delegated to it by the Board of Governors.
  • Then, the Senior Management Team is at the third step of this organizational structure and International Advisory Panel is at the 4th step.  

Financial Operations of AIIB: 

  • Bank will “provide or facilitate financing to any member, or any agency, instrumentality or political subdivision thereof, or any entity or enterprise operating in the territory of a member, as well as to international or regional agencies or entities concerned with the economic development of the Asia region.” 

Major functions of the bank are: 

1. Sovereign-Backed Financing: 

  • A loan to, or guaranteed by, a Member; 
  • A guarantee that: 

(a) covers debt service defaults under a loan that are caused by a Government’s failure to meet a specific obligation in relation to the Project or by a borrower’s failure to make a payment under the loan; 

(b) is accompanied by a Member Indemnity.

2. Non-Sovereign-Backed Financing: means any financing extended by the Bank that is not a sovereign-backed financing; it includes any financing to or for the benefit of a private enterprise or a subsovereign entity (such as a political or administrative subdivision of a Member or a public sector entity) that is not backed by a guarantee or counter-guarantee and indemnity provided by the Member to the Bank. 

3. Equity Investment: Bank may make direct equity investments in private or public sector companies. 

4. Preparation Advances for Sovereign-Backed Financing: Bank may decide to make an advance (Preparation Advance) to finance preparatory activities for a Project to be supported by sovereign-backed financing. 

Month: Current Affairs – December 2019

Categories: Banking & Economy

Important Points: Asian Infrastructure Investment Bank, solar power, Board of Governors, Governance of AIIB, Board of Director, Senior Management TeamSovereign-Backed Financing


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