BEIJING, December 27: China-backed Asian Infrastructure Investment Bank (AIIB) in which India is a founder member along with other 56 countries was formally established here on Friday and expected to start operation next month.
"The AIIB is legally established as the Articles of Agreement take effect today," China's Finance Minister Lou Jiwei said.
Articles of Agreement outline the financial share of each founding member as well as rules for policymaking, governance structure and business and operational systems for the bank.
The bank's establishment came after 17 funding members of the AIIB, which account for just over 50 percent of its share capital, ratified the agreement on the bank.
With authorised capital of $100 billion and subscribed capital of $50 billion, AIIB, based in Beijing, 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 percent, 8.52 percent, 6.66 percent stake respectively in the newly-formed bank. Based on the share holding, India is expected to get the post of the Vice President.
Their voting shares are calculated at 26.06 percent, 7.5 percent and 5.92 percent.
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 the Bank, which is addition to the BRICS Development Bank, headed by eminent Indian banker K V Kamath.
The establishment of the AIIB marks a milestone in the reform of global economic governance system, Lou said.
The AIIB will be operational after board of directors and executive council meet for the first time. The meetings are slated to run from January 16 to 18 in Beijing, according to Lou.
The bank's president will be officially appointed and the management team will be in place at the meetings, state-run Xinhua news agency reported.
The bank will start recruiting new members, the bank's president-designate, Jin Liqun, told Xinhua, adding that members of the International Bank for Reconstruction and Development and the Asian Development Bank (ADB) could apply to join the AIIB.
"The bank will always be open to new membership," Jin said.
"China is not deliberately seeking a veto power. Its stake and voting share in the initial stage are the natural outcome of current rules, and may be diluted as more members join," China's Vice Finance Minister Shi Yaobin was quoted as saying Xinhua.
As its name suggests, the AIIB will finance infrastructure - airports, mobile phone towers, railways and roads - in Asia.
There is a yawning infrastructure funding gap in Asia.
The ADB pegged the hole with about $eight trillion between 2010 and 2020.
While both the ADB and World Bank focus on a broad range of development programs including agriculture, education and gender equality, the AIIB will concentrate on infrastructure alone.
The International Monetary Fund, World Bank and ADB have all welcomed the AIIB initiative and see room for collaboration.
The AIIB is expected to offer loans to the first batch of projects in mid-2016.