World Bank Groups and Its Function – Part 2
Functions of World Banks:
- The World Bank Group consists of five Global Organizations which provide loan to the less developed and developing countries.
- The World Bank is the biggest Development Banking Organization of the world.
- It also acts as the observer at United Nations Development Group (UNDG).
- The World Bank provides loan according to three lending procedures i.e. loan from the own fund, loans from the borrowed capital and loans the Bank’s Guarantee.
- India borrows from World Bank through the IDA and IBRD for several development initiatives in areas like infrastructure, poverty reduction, rural development etc.
- Generally IDA provides fund for the projects in social sector in India.
- IBRD provides loan for the infrastructure projects in India.
- The World Bank has 30 founder members including India.
- The IBRD (International Bank for Reconstruction and Development) and the 4 associates [International Development Association (IDA), International Finance Organization (IFO), Multilateral Investment Guarantee Agency (MIGA) and International Center for the Settlement of Invest Disputes (ICSID)] of the organization together are known as World Bank Group.
- India is a member of IBRD, IDA, MIGA and IFO but not a member of ICSID.
- It stands for International Bank for Reconstruction and Development.
- It is the oldest of all the associates of World Bank Group and was established in the 1945.
- It provides loan to the less developed and developing countries at low interest rate.
- The loans are provided focusing various areas like irrigation, agriculture, healthcare, family welfare, urban development, dairy development etc.
- It stands for International Development Agency.
- It is called the “Soft Window” of World Bank.
- It was established in the year of 1960.
- The IDA provides infrastructural assistance to its member countries.
- The interest-free loans, which are known as Credits, are given by the IDA to develop the economic services in the poorest countries.
- It offers a grace-period of 10 years and hold the maturity from 35 years to 40 years.
- IBRD and IDA together are known as World Bank while all the organizations refer to the World Bank Group.
- It stands for the Multilateral Investment Guarantee Agency.
- It was established in the year of 1988.
- It encourages direct foreign investment in a nation by giving security against investment in case of any loss caused by the political disturbances.
- This security is given as the Political Risk Insurance.
- It stands for International Finance Corporation.
- It is the “Private Arm” of World Bank.
- The IFC was established in the year of 1956.
- It provides loan to the Private Sector Organizations of the member countries with comparatively low commercial interest.
- It provides advice for various private-public projects in a partnership with the Private Investors.
- It invests only in case of special contribution to compliment the role as the FFI (Foreign Financial Investor) of the market investors.
- It works to promote the private investment by both of the local and foreign investors.
- It helps the Government to privatize weak public enterprises as Capital Market Investor.
- It stands for International Center for Settlement of Investment Disputes.
- In is functional body which solves the Investment disputes.
- It solves the disputes related to the investment between the host countries ( where the investment is made) and foreign companies.
- The decisions of the ICSID are bound on the involved parties.
- It was established in 1966 under the “Convention on Settlement of Investment Disputes” between the States and the National of the other States.