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What is the World Bank and 6 Genuine Objective

What is the World Bank
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What is the World Bank

When you imagine the bank, you will see a bank near you or a bank where you have an account. Everyone is familiar with normal banks where you can deposit money, take loans, and transfer money. But what kind of World Bank is it? is it different? , What is the World Bank, let us know the answer from this article.

What is the World Bank

What is the World Bank

What is the World Bank

It is an international financial institution that provides finance to developing countries. The World Bank is a major source of funding and knowledge for developing countries. The purpose of this bank is not to make money by giving loans but to help developing countries.

History of the World Bank

The World Bank was established in the year 1945. Its headquarters are in Washington. This bank started its operations in June 1946. The purpose of the World Bank is to provide loans to low-income countries for their development.

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Objectives of World Bank

1. Capital supply –

The World Bank has an important function or objective of providing long-term capital to developing countries or member states. The main objective of this bank is to help developing countries by providing capital to them. In some situations, interest-free loans are provided by the World Bank to some countries. For example – a loan from the World Bank is given for the rehabilitation of a country after a war.

2. Increasing Productive Capacity –

The objective of the World Bank is to increase the resources and productive capacity of least-developed countries for their development. That is, the goal behind that is that the maximum number of people should produce in those countries and a maximum number of businesses should be established and that country should get profit from it and that country should develop.

3. Foreign Investment –

Foreign investment in developing countries helps in the development of that country. Therefore, by investing in a developing country, investors not only increase the production capacity of that country but also get a good profit, employ the people, and reduce the economic shortage and the country starts moving towards development. Therefore, promoting foreign investment in developing countries is an important objective of the World Bank.

4. Elevation of the standard of living –

It is said that an increase in the standard of living of a person means that the person is moving towards development. The same is the case with countries, if the standard of living of a country is raised, then automatically the people of that country move towards development. By providing capital to member countries for investment or production growth, the World Bank aims to raise the standard of living of the people in the country by indirectly contributing to production growth.

5. Low Interest Rate –

The World Bank works not to make a profit but to develop developing countries. If developing countries do not get funds from private capital organizations for production growth, the World Bank provides long-term loans at low interest rates to such countries. The World Bank tries to develop that country by keeping low-interest rates.

6. Lending –

The World Bank aims to provide loans to specific projects, institutions, private organizations, and member nation governments.

What is the World Bank

What is the World Bank

Work of the World Bank

1. Long Term Loan –

The World Bank provides long-term loans to member countries. These long-term loans can range from five years to twenty years. Hence, long-term lending gives businesses enough time to expand their production.

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2. Equity lending –

The World Bank lends up to 20% of its equity to member countries.

3. Financial aid to India –

The World Bank took the lead in setting up the India Ad Club to provide more financial assistance to India. Currently this club has been renamed as India Development Forum. India Development Forum is also known as IDF.

4. Lending –

75 percent of the World Bank’s total lending is to developing countries in Asia, the Americas, and Africa.

5. International Development Association –

This organization was established on 24 September 1960. It is an affiliate of the World Bank. International Development Association i.e. IDA is also known as the Soft Loan Window of the World Bank. IDA provides loans to poor countries on very easy terms and at low or interest-free rates.

6. Acceleration of sustainable or inclusive economic growth –

Lack of capital is one of the major obstacles to the development of developing countries. By providing capital, the World Bank works to accelerate sustainable or inclusive economic growth in developing countries. That is, the progress of that country is towards development.

7. Building Human Capital –

The World Bank promotes human capital growth and builds human capital.

8. Increases flexibility –

By providing capital to developing countries or by increasing their production capacity, the World Bank promotes the economic development of the country and strives to increase the resilience of the economy.

9. Attracting Private Sector Financing –

The World Bank also played an important role in attracting private-sector financing

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