The Asian Infrastructure Investment Bank (AIIB) is likely to invest USD 200 million in a fund of funds set up by India to take interest in infra projects, a top government official said here today.

Economic affairs secretary SC Garg said there will be a leverage of 10-12 times on the original investment, which can result in up to USD 2.4 billion flowing into infrastructure projects.

“Today the AIIB board is approving a project… They are investing USD 100 now and USD 100 million in the time to come. The USD 200-million will flow into the NIIF (National Investment & Infrastructure Fund) that we have set up,” Garg told reporters on the eve of the AIIB’s two-day annual summit being held here.

This is the first time that the country is hosting the annual summit of AIIB, which will be addressed by Prime Minister Narendra Modi on Tuesday.

“With this kind of a vehicle utilised, it will be possible to multiply the investment in infrastructure to a large multiple,” Garg added.

The finance ministry official also said the AIIB investment will be in a fund of funds, hinting that it will be different from the master fund closed recently.

When asked if the investment quantum is low, given that the projected corpus of the NIIF is USD 6 billion, Garg replied in the negative, and pointed out that the investment made by the Abu Dhabi Investment Authority was also of USD 250 million only.

AIIB vice-president Danny Alexander said the multilateral bank is also interested in the fund of funds as it will lead to a higher inflows into the infra sector.

The 2016-incorporated AIIB has approved USD 4.4 billion investments in the country, including USD 1.2 billion in its second largest shareholder after China, making the country the largest beneficiary so far.

The bank has a pipeline of USD 1.9 billion in six projects and Alexander said it is interested in projects in the transport, energy, water and waste management areas in the country given the large requirements in these sectors.

Garg said government has sent a proposal to AIIB to fund USD 475 million for the Mumbai Urban Transport Project- III which has already been approved in-principle.

Asked whether the bank, which is owned 31 per cent by China, will consider lending to the projects under China’s mega Belt Road Initiative, he parried a direct answer, and stressed that the bank is an apolitical organisation that invests in projects as per a board policy that is decided by the member-states.

Alexander further said it will not be able to comment on internal relations of member-states.

Garg said no one should consider the AIIB is dominated by a member-country (China) and stressed that the AIIB is as much a Chinese bank as the World Bank is American. Alexander also underlined the same.

To a question on India banning Chinese companies, Garg clarified that investments from companies from the Northern neighbour are welcome, but for concerns on security and not meeting local procurement norms under the initiatives to push local manufacturing.

Garg said the proposal to have an independent credit rating agency for the BRICS nations is on track and will be discussed at a meeting in Johannesburg next month.

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