Membership and Structure

Any country is eligible for membership of the World Bank if it subscribes to its charter under the Bank’s articles of agreement. Only those countries which are members of the IMF can be considered for membership of the IBRD. The total membership of the World Bank at present is 184. A member can withdraw at anytime its membership however, it is effective upon receipt by the Bank of a written notice from the member to that effect.

The Bank has a Board of Governors, Executive Directors, a president and other staff. All powers of the Bank are vested in the Board of Governors consisting of one governor and one alternate appointed for five years by each member. The Board of Governors meets once every year. The annual meeting deals with matters requiring formal action and informal exchange of views on major International problems. The executive directors function in continuous session and meet regularly once a month.

Functions

The World Bank has one central purpose of promoting economic & social progress in developing countries.

The main functions of the World Bank are-

• To assist in the reconstruction and development of the territories of its member governments by facilitating investment of capital for productive purposes.

• To promote foreign private investment by guarantees of or through participation in loans and other investments of capital for productive purposes.

• To make loans for productive purposes out of its own resources or out of funds borrowed by it where private capital it not available on reasonable terms.

• To promote the long range growth of International trade and the maintenance of equilibrium in the balance of payments of members.

The World Bank’s loans are directed to help the members to build foundation of sound economic growth. Loans made or guaranteed by World Bank are, except in special circumstances for the purpose of specific projects of reconstruction and development.

Activities, Capital and Lending Operations

The fundamental aims underlying the World Bank’s activities are

• The Bank is not intended “to provide the external financing required for all meritorious projects of reconstruction and development (but) to provide a catalyst by which production may be generally stimulated

• The Bank should encourage necessary action by the member governments to ensure that the Bank’s loans will actually prove productive

• The Bank must play an active role to initiate and develop plans to the end that the Bank’s resources are used wisely from the standpoint of the world

At the time of establishment, the authorised capital of World Bank was $10,000 million which was divided into 1,00,000 shares of $ 1,00,000 cash of this $ 9,400 million was subscribed. A member’s total subscription in the capital of the Bank is divided into three parts:

a. Two percent of the subscription is payable in gold or U.S. dollars and is freely available for lending

b. 18% of the subscription is payable in member’s own currency and is available for lending with the consent of the member whose currency in involved.

c. The remaining 80% of the subscription is not available for lending and is subject to call as and when required to meet the Bank’s obligations. In 1997, the authorised capital of IBRD was US 188 billion.

The Bank makes loans to members in any one or more of the following ways-

• by granting or participating in direct loans out of its own funds

• by granting loans out of the funds raised in the market of a member or otherwise borrowed by the bank

• by guaranteeing in whole or part loans made by private investors

Before a loan is made or guaranteed, the Bank ensures that the-

• project for which the loan is asked has been carefully examined by a competent committee as regards the

merits of the proposal

• Borrower has reasonable prospects for repayment of loan

• Loan is meant for productive purposes

• Except in special circumstances the loan is meant to finance the foreign exchange requirements of specific projects of reconstruction and development

The World Bank normally makes medium and long term loans. The interest rate charged by the Bank on its loans is the estimated Cost to the Bank and is uniform without any distinction being made among the borrowers.

Technical Assistance and other Activities

World Bank also gives technical assistance to members on matters relating to learn operations particularly in regard to-

• defining priorities among different projects

• Modifications in the technical plans for projects designed reduce its cost or make it more efficient

• Administrative or organisational arrangements for a projects or as to plans for its financing

The Bank has also provided technical assistance in development programming through various survey missions which make intensive studies of national resources of developing member countries and make recommendations.

IBRD jointly with the IMF has taken initiative in providing relief to the hearty indebted poor countries (HIPC’s) by reducing their external debt burden.

World Bank and India

India is a founder member of the bank. India is the biggest single borrower of the bank India received $ 5472 million financial help during the third plan period from the 12-nation Aid India Consortium formed through the Sincere efforts of the bank. It played the role of a mediator in the canal water dispute with Pakistan. The bank’s role in India’s economic development has been more than substantial and but for the timely loans given to India by the bank, the success of the country’s economic development plans would have been considerably delayed.

Conclusion

The World Bank has been largely instrumental in accelerating the pace of economic development in different countries of the world. The purpose of the Bank can be fulfilled only when the rate of interest charged by the bank is low enough for all countries to enable them to take loans from the bank more frequently. The Bank is a nonpolitical institution expected to treat all member equally and not to discriminate among them.

It is hoped that in future the world Bank will be in a stronger positions to sender financial assistance to the member countries with its increased capital resources and the active co-operation of its affiliates i.e. the International Development Association (IDA) and the International Finance Corporation (IFC)

Reference:

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