The term World Bank is generally used for the actual name of the bank which is “The International Bank for Reconstruction and Development” (IBRD). This is an international financial institution whose main purpose is to assist its member countries in their development of its territories and also try and increase the promotion for funding. In the process of promoting for funding the bank can help the underdeveloped countries in getting investments and it also helps in promoting the long-range trading that eventually ends up increasing the growth of the international trade.
The IBRD, also known as the world bank was established in the year of 1945 at the United Nations Monetary and Financial Conference in Bretton Woods, New Hampshire. The bank had opened for business in June 1946 and it has helped in the reconstruction of the nations that were very severely affected by World War 2. Since the decade of the 1960s, the IBRD has shifted its focus from the developed countries to the developing third world countries that actually need financial help.
To provide capital to the member countries for the long run economic reconstruction and development.
To make sure that there is a long-run capital investment that assures the Balance of Payments (BoP) equilibrium and balanced development of international trade.
It provides the guarantee for loans that have been granted to small and large units and other projects for the member countries of the world bank.
To make sure that the implementation of the development projects so as to bring about a smooth transference from a wartime to a peace economy.
To promote the investment of capital amount by member countries by the following ways; The first one is to provide a guarantee on capital investment and private loans. the second way in which they can promote the capital investments is that if there is no private capital that is available even after providing a guarantee, then the IBRD provides the loans for productive activities under certain considerate conditions.
World Bank mainly play the role of providing loans to the member countries for various development works, especially to the underdeveloped countries. The World Bank provides long-term loans for various development projects which vary from a 5 to 20 years duration.
World Bank provides various technical services to the member countries. Due to this reason, the World Bank has established “The Economic Development Institute” and a Staff College in Washington.
Bank can grant loans to a member country up to 20% of its share in the paid-up capital.
The quantities of loans, interest rate, and terms and conditions are determined by the Bank itself.
Generally, the Bank grants loans for a particular project duly submitted to the Bank by the member country.
The nation that has made the debt has to repay either in currencies of the reserve or in the currency in which the loan was sanctioned.
Bank also provides a loan to private investors belonging to member countries on its own guarantee, but for this loan, private investors have to seek prior permission from those countries where this amount will be collected.