For India, China-backed lender may be answer to coal investment

Kim said he understood India's position on coal-fired energy projects, but the World Bank's stand would not change.

"We have to be sensitive to the fact that climate change is something that, India for example, has contributed much less to than the United States or Europe or other countries and what they're saying is, that we need energy," he said.

"And what they're saying is: that we need energy now so that our economies can grow, so that we can provide jobs for our people," he said.

"Now we won't be engaged in coal unless there's absolutely no other option, and we'll see where they go," Kim said.

India signed up late last month to be a founder-member of the AIIB, and is also a member of a new development bank from the BRICS group of emerging markets - Brazil, Russia, India, China and South Africa.

The Indian official, who was involved in the AIIB decision, said the funding of infrastructure in the region by the World Bank and the ADB was inadequate.

"Had the World Bank resourced its capital base, had the World Bank done reforms that are due, and ADB also resourced the capital base, perhaps there would have been no need to set up the (new) bank," the official said.

Experts say the Asia-Pacific region needs about $1-1.5 trillion per year to fund infrastructure needs. The World Bank's total lending to East and South Asia was about $16.6 billion last year. At the end of 2013, the ADB's lending amounted to $21.02 billion, including co-financing with other development partners.

"The infrastructure financing gap in Asia, in emerging Asia, is so big and even the existence of ADB, World Bank, and other multilateral development banks cannot fulfill that demand," Indonesian Finance Minister Bambang Brodjonegoro told Reuters last week. "AIIB will be a welcome newcomer."

The AIIB was launched at a ceremony in Beijing at which 21 nations were represented, but Australia, South Korea and Indonesia were absent. On Tuesday, Brodjonegoro said Indonesia could join the AIIB as early as next week.

"Don't imagine for a moment that the AIIB is just about economics," said Hugh White, professor of strategic studies at Australian National University.

Asian Infrastructure Investment Bank will guide capital	ADB to work together with China-proposed AIIB