Jakarta. The board of the China-backed Asia Infrastructure Investment Bank has approved a $216.5 million loan for Indonesia's National Slum Upgrading Project, which is aimed at giving people living in squalid and overcrowded areas access to urban infrastructure and services.

The loan is part of the development lender's first $509 million loan for four infrastructure projects in South and Central Asia, including power-grid upgrades in Bangladesh and highway construction in Pakistan and Tajikistan, AIIB said in a statement on Friday (24/06).

"This financing supports the government's program of urban slum infrastructure investment in the central and eastern parts of the country," AIIB said in the statement.

The loan, which is expected to be co-financed by the Washington-based World Bank, would be used to improve the capacity of government officials as well as to finance infrastructure improvements, site development and construction, AIIB said.

"Direct and indirect beneficiaries of the project are expected to include 9.7 million slum dwellers living in 154 cities. Slum dwellers are likely to experience significant betterment of living conditions due to improvements in access to urban infrastructure and services," the lender said.

AIIB was proposed by Chinese President Xi Jinping two years ago and became operational in January. It has 57 founding member states and $100 billion in committed capital. The lender plans to invest $1.2 billion this year.

The bank is holding its first annual meeting in Beijing on Saturday.

Additional reporting from Reuters