International Bank for Reconstruction and Development

Previously called The World Bank, IBRD is the world wide known financial institute that provides loans to developing countries at a rate suitable according to their economy.

1. IBRD International Bank for Reconstruction and Development

2. INTRODUCTION The International Bank for Reconstruction and Development (IBRD) is an international financial institution which offers loans to middle-income developing countries. The IBRD is the first of five member institutions which compose the World Bank Group and is its headquarter is in Washington, D.C., United States. It was established in 1944 with the mission of financing the reconstruction of European nations devastated by World War II. Together , the International Bank for Reconstruction and Development and its concessional lending arm, the International Development Association, are collectively known as the World Bank as they share the same leadership and staff.

3. HISTORY The IBRD and IMF were established by delegates at the Bretton Woods conference in 1944 and became operational in 1946 The IBRD was established with the original mission of financing the reconstruction efforts of war-torn European nations following World War II The Bank issued its inaugural loan of $250 to France in 1947 to finance infrastructure projects. The institution also established its first field offices in: Paris , France. Copenhagen , Denmark . Prague, Czechoslovakia.

4. All the way till 1950s , the Bank financed projects seeking to dam rivers, generate electricity, and improve access to water and sanitation. Following the reconstruction of Europe, the Bank's mandate has transitioned to eradicating poverty around the world. In 1960, the International Development Association (IDA) was established to serve as the Bank's concessional lending arm and provide low and no-cost finance and grants to the poorest of the developing countries as measured by gross national income per capita .

5. FUNCTIONS OF IBRD Granting reconstruction loans to war devastated countries. Granting developmental loans to underdeveloped countries. Providing loans to governments for agriculture, irrigation, power, transport, water supply , educations , health, etc. Providing loans to private concerns for specified projects. Promoting foreign investment by guaranteeing loans provided by other organizations. Providing technical, economic and monetary advice to member countries for specific projects Encouraging industrial development of underdeveloped countries by promoting eco­nomic reforms.

6. CAPITAL RESOURCES OF IBRD: The initial authorized capital of the World Bank was $10,000 million, which was divided in 100,000 shares of $100,000 each. The authorized capital of the Bank has been increased from time to time with the approval of member countries. On 30 th June, 1996, the authorized capital of the Bank was $188 billion out of which $180.6 billion (96% of total authorized capital) was issued to member countries in the form of shares.

7. Member countries repay the share amount to the World Bank in the following ways : 2 % of allotted share are repaid in gold, US dollar or Special Drawing Rights (SDR). Every member country is free to repay 18% of its capital share in its own currency. The remaining 80% share deposited by the member country only on demand by the World Bank.

8. GENERAL PROGRESS The Bank's membership has increased from the initial number of 30 countries to 68 countries in 1960 and to 151 countries in 1988. In 1960, the Bank approved loans worth $ 659 million which went up to $ 14,762 million in 1988. In 1960, 31 operations were approved for financial assistance. In 1988, the number of operations approved increased to 118. Cumulatively , up to June 1988, the IBRD has provided loans worth $155049 million.

9. LENDING OPERATIONS In 1988 , the IBRD has granted loans worth $155049 million. About 22% of the Banks aggregate lending is for energy, 21% for agriculture and rural development, 18% for transportation and communications and 10% for industry and small scale enterprises.

10. LOANS FOR RECONSTRUCTION In the initial years of its establishment, the World Bank's loans were mainly directed to the European countries (whose economies were shattered during the World War II) for financing their programmes of reconstruction. The Bank provided loans worth about $ 5, 00 million for reconstruction purpose.

11. ASSISTANCE TO UNDERDEVELOPED COUNTRIES The World Bank has a special role in accelerating the process of economic and welfare schemes in these countries. The following are the main aspects of Bank's assistance to the underdeveloped countries : Bulk of the Bank's financial assistance has been given to the underdeveloped countries for the promotion of development. Through its 'third window", the Bank has made available loans to the underdeveloped countries at tower interest rates. The Bank organizes meetings of creditor countries for extending assistance to the developing countries. Aid India Club is one such example. The Bank also provides technical assistance to the developing countries by making available training facilities through its various institutions.

12. CONCLUSION Conclusion leads us to the final verdict which is very well accepted all over the world, that for whatever mission ‘The World Bank Group’ was established, it is very well able in completing its work in a very efficient manner, providing proper financial help to the countries in need in time. Another important aspect to be considered is that, the interest rates and the repay time for every country varies according to its ability, hence countries already under stress are not brought under any more of it.