The project funding agreement has been signed between AIIB and Bangalore Metro Rail (BMRCL), the operator of the project.
The loan amount will fund the construction of track between Gottigere and Nagawara.
The European Investment Bank (EIB) has already agreed to provide €500m for the stretch in two payouts.
Adding the latest financing from AIIB, the total amount increases to around €800m.
BMRCL needs to raise Rs121.41bn ($1.75bn) for the second phase of the Bangalore Metro. The company has already secured Rs73bn ($1.05bn) and expects to raise the remaining amount soon.
The project involves extending the Phase I corridors and two new lines.
It will support the network by adding 72.095km, of which 13.79km is underground, 0.48km at ground level, and 57.825km elevated.
Once the construction is completed, it will add 61 stations to the network, including 12 underground stops.
The contract involves the company to provide engineering, installation, testing and commissioning of 750V DC third-rail traction electrification for a 33km metro extension.