The World Bank is an international financial institution that provides credit to developing countries for the projects which lead to the economic development of the country. Its Motto is – Working for a World Free of Poverty.
World Bank presently is made up of 188 member countries. South Sudan is the 188th country to join World Bank in 2012. India joined the World Bank in 1944 (when the Bank was formed) and is among the top annual borrowers.
The World Bank Group has 5 institutions namely
- The International Bank for Reconstruction and Development (IBRD): It lends to governments of middle-income and creditworthy low-income countries.
- The International Development Association (IDA): It provides interest-free loans called credits and grants to governments of the poorest countries.
- The International Finance Corporation (IFC): is the largest global development institution focused exclusively on the private sector. It helps developing countries achieve sustainable growth. It provides credits to businesses which help in the growth of economy of the member countries and in this case there is no need of security from the country’s government.
- The Multilateral Investment Guarantee Agency (MIGA): It promotes foreign direct investment (FDI) into developing countries to support economic growth, reduce poverty, and improve people’s lives. MIGA fulfills this mandate by offering political risk insurance (guarantees) to investors and lenders.
- The International Centre for Settlement of Investment Disputes (ICSID): It provides international facilities for conciliation and arbitration of investment disputes.
Together, IBRD and IDA make up the World Bank. World Bank provides low-interest loans and grants to developing countries. The investment projects include education, health, public administration, infrastructure, financial and private sector development, agriculture, and environmental and natural resource management. The projects are co-financed with governments, other multilateral institutions, commercial banks, export credit agencies, and private sector investors.
The loan amount provided by the World Bank is raised by collecting funds from the member countries. Interest rates on World Bank loans are revised every six months and typically, the Bank charges borrowers a rate of interest 0.5 per cent above its own cost of borrowing on the international market.
The World Bank Group has set two goals for the world to achieve by 2030:
- End extreme poverty by decreasing the percentage of people living on less than $1.90 a day to no more than 3%.
- Promote shared prosperity by fostering the income growth of the bottom 40% for every country.
When and why the World Bank was formed?
- The World Bank was created at the 1944 Bretton Woods Conference in July 1944. It is headquartered in Washington, D.C, USA.
- The World Bank is not a private institution that and so is not owned by a specific person.
- The World Bank and International Monetary Fund (IMF) were created at the end of World War II by the U.S. and British governments. There were various clashes between the making of governments. This required international institutions that would promote capitalist policies and strengthen the power of the corporate sector.
Some of the lending by World Bank to India:
- The Swachh Bharat Abhiyan of BJP government has got $ 1.5 billion loan from World Bank.
- Government of India and World Bank signed $178.50 Million agreement for Neeranchal National Watershed Project.
- Government of India and World Bank signed $ 75 Million agreement to Improve Incomes of Farmers and Health in Rural Telangana.
- World Bank approved $1.5 Billion to Support India’s Universal Sanitation Initiatives.
- And many more…
The present president of World bank is Jim Yong Kim since July 2012. The president is responsible for chairing the meetings of the Boards of Directors and for overall management of the World Bank Group. Traditionally, the World Bank Group President has always been an American citizen nominated by the United States, the largest shareholder in the World Bank Group. The term length of president is 5 years which is renewable.
The Corporate Office of World bank in India is in New Delhi.