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News: AIIB needs to diversify project areas as it completes three year of its functioning

Important Facts:

AIIB is a multilateral development bank with a mission to improve social and economic outcomes in Asia
AIIB currently has 93 members countries and Beijing acts as AIIB headquarter
India has most benefitted from AIIB as about 25% of approved projects belongs to India
India along with China has permanent seats on the AIIB board of directors

Analysis of 3 years AIIB functioning:

Critics View: considered AIIB as an attempt to supplant international financing institution
Counter View: AIIB has devised innovative finance mechanism, uphold best practices and many projects are co-financed by World Bank, Asian Development Bank
Critics View: raised issue of effective governance and inadequate environmental and social safeguards in projects approved
Counter View: AIIB projects had been socially and environmentally conscious leading to AAA rating by International rating agencies

Way Forwards for AIIB:

Need to widen portfolio of projects in areas such as smart cities, renewable energy, urban transport, clean coal technology, solid waste management and urban water supply
Faster loan appraisal procedure and lean organizational structure to lower cost of loans
Diversifying financing instruments including local currency financing
Flexible procedures for responding to project clients needs
To leverage its “special fund mechanism” to crowd in infrastructure financing from external sources