WORLD BANK

The World Bank Group constitutes the following Institutions :

• International Bank for Reconstruction and Development (IBRD)
• International Development Association (IDA)
• International Finance Commission (IFC)
• Multilateral Investment Guarantee Agency (MIGA)
• International Centre for Settlement of Investment Disputes (ICSID)
• The IDA and the IBRD constitute the World Bank. Robert Zoellick is its present head.

1. International Bank for Re – Construction and Development (IBRD)

• IBRD was established in December 1945 with the IMF on the basis of the recommendations of the Bretton Woods Conference. That is why IMF and IBRD are called Bretton Wood Twins. Its head – quarter is at Washington D.C.
• At present, 186 nations are members of the IBRD.
• Objective is of assisting of member nations in the economic re – construction and development of their territories.
• The bank makes its loans on terms that are reasonable but at the same time sufficient to earn a profit in the form of interest and commission fees. The loans are long – term, generally repaid in the currencies loaned over 20 Years, with a five – year grace period.
• May also guarantee loans by private investors.
• The loans may be made to member countries, to their political sub – divisions or to private business enterprises in their territories. If the borrower is not a government guarantee of the member – government concerned is required.

Difference between IBRD and IMF

• The banks lends while funds sells i.e., it makes available the necessary currency of a particular country in case of a shortage.
• The bank assists by advancing long – term credits for development and re – construction, whereas IMF facilitates the balanced growth of international trade by short – term credit.

2. International Development Association (IDA) India

• IDA is an associate institution of IBRD and is known as the Soft Loan Window of World Bank.
• It was established on September 24, 1960.
• It provides loans to its member countries and no interest is charged on these long – term loans (but there is a 0.75 per cent annual service charge on disbursed credits). Most IDA commitments are made to countries with annual per capita incomes less than $785. Credits are extended for terms of 40 Years for least developed countries and 35 Years for other countries.
• As an affiliate of IBRD, its directors, officers and staff are those of the IBRD.

3. International Finance Corporation (IFC)

• Established in 1955, the IFC became a UN specialized agency in 1957.
• It provides loans to private industries of developing nations without any government guarantee and also promotes the additional capital investment in these countries.