What are the Functions & Objectives of the World Bank

Safalta Expert Published by: Kirti Singh Updated Mon, 13 Jun 2022 05:40 PM IST

Highlights

Check all the details related to the World Bank, its objectives, and its functions.

The World Bank is an internationally recognized bank that provides financial and technical assistance to developing countries all over the world. Moreover, it also works in aiding their advancement, in an economy with the goal to reduce the poverty. World Bank has all the knowledge related to developing countries. Also, it provides funding and is the largest source of funding. At the present time, the president of the World Bank is Jim Young Kim and there is a total of 189 countries that has membership in the World Bank and 173 countries are under IDA. Several organizations like MIGA, IFC, and ICSID all manage the World Bank. Moreover, the World Bank headquarters are located in Washington DC and have more than 10000 staff all over the world.
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Organizations Associated with World Bank:

There are a total of five organizations of the World Bank Group that are providing loans to developing countries. Below is the list of Organizations Associated with the World Bank:
(1) The International Finance Corporation (IFC)
 
(2) The Multilateral Investment Guarantee Agency (MIGA)
 
(3) The International Bank for Reconstruction and Development (IBRD)
 
(4)The International Development Association (IDA)
 
(5) The International Centre for Settlement of Investment Disputes (ICSID).
 
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Main Objectives of World Bank:

1. Providing long-term capital to all the members' countries for development and economic reconstruction.
2. Inducing long-term capital investment for assuring balanced development of International trade and BOP equilibrium.
3. Promoting Capital investment in members countries in the following ways:
a. Providing guarantees on capital investment and private loans.
b. If capital is not available despite the provision of a guarantee, the IBRD makes loans for productive activities on reasonable terms.


World Bank Functions:

At the moment, the World Bank plays an important role in providing loans for development projects to member countries, particularly underdeveloped countries. The bank makes loans for various development projects ranging in duration from 5 to 20 years.
 
i. The bank can make loans to member countries worth up to 20% of its paid-up capital.
 
ii. The bank also makes loans to private investors who are members of its own guarantee, but private investors must obtain permission from their home country. Banks charge service fees ranging from 1% to 2%.
 
iii. The World Bank determines the amount of loan service, interest rate, and terms and conditions.
 
iv. Generally, banks make loans for specific projects that have been duly submitted to the bank.
 

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