The China-led bank held its inaugural board of directors meeting this weekend, chaired by its new president Jin Liqun.
The AIIB was announced in Beijing in 2014, with the aim of boosting investment in infrastructure in Asia and was established formally by the 52 member countries signing the Articles of Agreement in June 2015.
The AIIB will place legal, social and environmental demands on projects, but will not insist that borrowers implement free market policies as recommended by the IMF and the World Bank, sources have told Reuters.
The bank will only lend in US dollars, although it may raise capital in other countries using the euro and the renminbi, Jin said, according to Reuters.
"We already have a very good pipeline of co-financing projects (with other international development banks) and stand alone projects," Jin told reporters, Reuters said.
"Asia's financing needs for basic infrastructure are absolutely enormous," Chinese President Xi Jinping said at the launch, Reuters said. The bank would aim to invest in projects that were "high-quality, low-cost", he said.
The AIIB is expected to lend $10 billion-$15 billion a year for the first five or six years and will start operations in the second quarter of 2016, Reuters said.