Chinese Parliament has ratified the Asian Infrastructure Investment Bank (AIIB) agreement today. It establishes the legal framework for the Bank.
The ratification is a significant step closer to the AIIB’s formal establishment slated for the end of this year, as China is the bank’s largest shareholder.
The 54 founding members of the bank had already signed the agreement and the remaining three are expected to sign before the end of this year.
All prospective members should have their legislatures ratify the agreement before the end of 2016 to formally become founding members.
With authorised capital of $100 billion and subscribed capital of $50 billion, AIIB will invest in sectors including energy, transportation, urban construction and logistics as well as education and healthcare.
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 in the newly-formed bank. Their voting shares are calculated at 26.06 per cent, 7.5 per cent and 5.92 per cent.
AIIB is regarded by some as a rival for the IMF, the World Bank and the Asian Development Bank (ADB), which are regarded as dominated by developed countries like the United States.
The United Nations has addressed the launch of AIIB as “scaling up financing for sustainable development” for the concern of Global Economic Governance.
The bank was proposed by China in 2013 and the initiative launched at a ceremony in Beijing in October 2014.
Based on the share holding, India is expected to get the post of the Vice President. China has already nominated its former finance minister Jin Liqun as the first President of AIIB which is addition to the BRICS Development Bank, headed by eminent Indian banker K.V. Kamath.