Banking World Bank

World Bank

World Bank is an international financial institution that provides loans to developing

Countries for development programs.:-

World Bank was formed on July 1944 at the Brett on Woods Conference.

Headquarter of World Bank is located at Washington D.C. (U.S.A.)

The main purpose of the World Bank is ''Reduction of Poverty''.

Current member nations of World Bank are 189.

Current president of the World Bank is Jim Yong Kim.

World Bank is comprises of two institutions - International Bank for Reconstruction and Development (IBRD) and the International

Development Association (IDA).

World Bank is member of the United Nations Development Group as well as World Bank Group.

World Bank Group includes - International Bank for Reconstruction and Development (IBRD), International Development Association,

International Finance Corporation, Multilateral Investment Guarantee Agency, International Center for Settlement of Investment Disputes.

The president of the World Bank comes from the largest shareholder. Members are represented by a Board of Governors.

If a country wants to be a member of World Bank, it has to purchase the shares of world bank group institutions as per agreement, rules and regulations set.

The five largest shareholders are U.S., U.K., France, Germany and Japan.

The largest shareholders nations have their own Executive Directors.

Objectives and Functions

To help in reconstruction and development of member countries.

Spread peace all over the world regarding financial terms.

Helps to the economies of those countries destroyed by wars.

Helps to developing and less developed countries by crediting the finance.

To promote private foreign investments.

Investment of money in productive purposes only.

World Bank can grant loans to a member country up to 20%of that country’s share in the paid up capital.

The borrower nation has to repay either in reserve currencies or in the currency in which the loan was sanctioned.

Membership

Any country can become the member of world bank if 75% of the existing member countries approved the application.

Any member nation can also resign from its membership voluntarily or if any country violates the rules of the world bank.

Management

Management of World Bank includes - Board of Governors, Board of Executive Directors, Loan Committee, Advisory Committee, President and other members of the staff.

Board of Governors of the World Bank includes one Governor (Finance Minister) and one alternate governor (governor of central bank) appointed by each member country for a term of 5 years. Board is required to meet at least once in a year.

Executive Directors are 21 and out of this 6 are appointed by the six largest share holders like USA, UK, Germany, France and Japan.

The remaining 15 members are elected by the rest of member countries. It meets once a month to carry on daily routine work.

President is appointed by board of executive directors.

World Bank performs its functions with the help of two committees – Advisory Committee and the Loan Committee.

Advisory Committee includes 7 Experts appointed by the Board of Governors. Loan Committee is constituted by the executive directors and loan is provided as per the economies of member countries.