B.Com Ist Year World Bank Question Answer Notes

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World Bank

39. Describe the objectives and organisation of World Bank. In what ways it has benefitted India ? (Bareilly, 2013)


Critically examine the objectives and progress of  World Bank. Describe in brief its role in India’s economic development.

(Meerut, 2013)

Ans. The International Bank for Reconstruction and Development (IBRD), popularly known as the World Bank was established as a result of the deliberation at the Economic Conference held at Bretton Woods, on 27th December, 1.944. The Bank began its operation from 25th June, 1946.


The various objectives of World Bank, as incorporated in the Articles of Agreement, are as follows:

(1) Reconstruction and Economic Development : The main objective of the World Bank is to help in the reconstruction and development of member countries by facilitating the investment of capital for the productive purposes including the restoration and reconstruction of economies devastated by war.

(2) Encouragement to Investment: Another objective of the World Bank is to promote private foreign investment through guarantees and participation in loans and other investments made by private sectors.

(3) Balanced Growth of International Trade: World Bank promote long term balanced growth of international trade and the maintenance of equilibrium in the balance of payments of member countries by encouraging long term international investments.

(4) Establishment of Peaceful Economy : World Bank bring about an easy transition from a war economy to a peacetime economy.

 (5) Development of Productive Resources : World bank ucourages the development of productive resources in developing puntries by supplying them investment capital. It help in raising ductivity, the standard of living and the conditions of labour in member countries.

(6) Encouragement of Loans : The World Bank adu loans to member countries primarily to help them lay down foundation of sound economic growth. The loans made by the R either directly or through guarantees are intended for certa specific projects of reconstruction and development in memin countries.


All the member nations, which had joined the IMF in the beginning became the original members of the World Bank. Ant member can withdraw at any time its membership through written notice to the Bank. At present, the total membership of the World Bank increased to 188.


World Bank consists of the Board of Governers, the Board of Executive Directors, the Advisory Committee and other member of the staff. The Board of Executive Directors consists of 21 members, which meets regularly once a month to carry on the routine work of the Bank. The advisory committee consists of seven members who are experts in various branches of banking. Board of Governers is a supreme policy making body of the bank. The Board consists of one Governer and one alternate Governer appointed for five years by each member nation. Board of Governers meets annually to frame the general policy of the Bank.


The main functions of the World Bank are as follows:

(1) Advances Loans to Members: The Bank advances loans to members in the following three ways:

(i) Loan Out of Its Own Fund : The Bank collects capital

contributions from its members. This results in the creation of a sizeable fund out of which the Bank advances loans to the needy member countries. The Bank also insists upon the fulfilment of certain conditions before advancing loans to member countries.

(ii) Loans Out of Borrowed Capital : Sometimes the Bank does not grant loans out of its own funds. It borrows funds from another member country for the purpose of giving loans to the needy members. The Bank pays interest to the member country from which it has borrowed funds.

(iii) Loans Through Bank’s Guarantee : Sometimes the Bank encourages the private investors of a country to le their funds to another country by guaranteeing the repayment ofloans and interest thereon.

(2) Technical Help : The Bank also extends technical assistance to its member countries. In this context, the Bank sends to the member countries its economic experts to carry out the general survey of their physical resources. In addition, the Bank also helps the member countries in solving their economic problems.

(3) Training Programme : The Bank also gives training to the officers from the member countries in the preparation and implementation of development projects. With this objective in view, the Bank established in 1956, an institute known as “The Economic Development Institute’. This institute gives short-term training to the officers and employees from the member countries.

(4) Settlement of Disputes : Being a international institution, World Bank, settle disputes among the member nations. It settled the River Water Dispute between India and Pakistan. The World Bank also played a commendable role in setting the financial dispute relating to the nationalization of Suez Canel between the U.K. and Egypt.

(5) Environment Protection : World Bank is providing technical assistance and advise to member nations for their protection of environment.

(6) Economic and Social Research: In the field of economics and social research, the Bank has conducted and completed various Research Projects and smaller Research studies. The Bank has also acted as Executing Agency for the studies financed by the United Nations Development Programme.


The functioning of the World Bank has been subjected to the following criticism:

(1) Inadequate Financial Aid : The capital and other nancial aids of the World Bank are not adequate to meet the wcreasing requirements of the member nations. Hence, there is need to mobilize still larger resources for the betterment of the International community.

(2) Discriminatory Treatment: The Bank does not provide loans purely on merit and economic considerations. The help given loping countries by the World Bank are too inadequate. It has anatory behaviour against some nations in favour of certain to developing countr discriminatory beh others.

(3) High Interest Charges : World Bank provide loans at rest rates from the point of developing nations. The Objectives of the world bank can be achieved only when the rate of interest is low enough to induce all countries to seek development loans at frequent intervals.

(4) Emphasis on Repaying Capacity : The hand orthodox and rigid standard in regard to sanction of loans gives more emphasis on repaying capacity of loan, prior to the grant of loan. Thus, the less developed countries may not ha get the full advantage of the facilities offered by the Bank.

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