AIIB puts its projects in Russia, Belarus on hold due to Ukraine crisis

China-based Asian Infrastructure Investment Bank (AIIB) on Thursday put on hold all its projects in Russia and its ally Belarus, a significant move amid the heightening crisis in Ukraine.

The bank's decision was regarded as noteworthy considering that Russia is its third-largest shareholder. India is the second-largest shareholder after China.

Former RBI Governor Urjit Patel is the Vice President for Investment Operations of Beijing headquartered AIIB.

The bank is headed by former Chinese Vice Minister for Finance, Jin Liqun.

Besides being the second-largest shareholder India is also AIIB's biggest beneficiary by obtaining USD 6.7 billion funding for 28 projects.

"Our Bank is actively monitoring the situation and assessing its impact on AIIB's operations and our members' economies" as the Ukraine war unfolded, a press release posted on the bank's website said.

"We, the Management, will do our utmost to safeguard the financial integrity of AIIB, against the backdrop of the evolving economic and financial situation," it said.

"Under these circumstances, and in the best interests of the Bank, Management has decided that all activities relating to Russia and Belarus are on hold and under review," the release said.

The bank has financed several projects in Russia and Belarus.

Explaining its decision to put the projects in Russia on hold, the AIIB said it is a multilateral organisation created by an international treaty, and adherence to international law lies at the very core of our institution".

"AIIB Management believes that multilateralism provides the best framework for countries to cooperate in dealing with common challenges and supporting development," it said.

"As the war in Ukraine unfolds, AIIB extends its thoughts and sympathy to everyone affected. Our hearts go out to all who are suffering," it said.

"AIIB stands ready to extend financing flexibly and quickly and support members who have been adversely impacted by the war, directly or indirectly," the release said.

"Economic spillover from commodity price shocks, financial market volatility and other factors may adversely impact our members' economic situation. We will work closely with our partner multilateral organisations to provide any needed support expeditiously," it said.

On Wednesday, the World Bank announced that it will stop all its programmes in Russia and Belarus with "immediate effect" in response to Moscow's military operations in Ukraine and "hostilities" against the people of the war-torn country.

On February 24, Russian forces launched military operations in Ukraine, three days after Moscow recognised Ukraine's breakaway regions - Donetsk and Luhansk - as independent entities.

The decision comes as a large number of countries, organisations and businesses are severing ties and have imposed sanctions on Russia over the country's invasion of Ukraine, and with Belarus for its support and cooperation with Moscow.