INTERNATIONAL FINANCIAL

INSTITUTIONS

By:- Dipali
Amit
Pallav
Rama
INTERNATIONAL MONETARY
FUND

 It is an organization to monitor the proper

conduct of the international monetary system.

 A source of liquidity to member countries

OBJECTIVES
 To promote international monetary
cooperation

 To facilitate expansion and balanced

growth of international trade.

 To promote exchange stability

 To assist in establishment of
multilateral system of payment

 To give confidence to members by

making general resources of fund
available to them temporarily.

 To lessen the degree of disequilibrium

STRUCTURE

 Central office: Washington

 No of members: 181

 Highest authority: board of Governors

 Board of Executive Directors:24

RESOURCES

 QUOTAS: represent the subscription by a

member country to the capital fund of IMF

 SDRs: are the entitlements granted to member

countries enabling them to draw from the IMF
apart from their Quotas.
 GENERAL ARRANGEMENTS TO
BORROW

 Was started in 1962

 Group of 10 lend to IMF upto the agreed limit

Drawing from IMF
 Tranche policies
 Reserved tranche
 Credit tranche
 Compensatory financing facility

 Buffer stock financing

 Extended fund facility

 Standby arrangements

 Special oil facility

 Enlarged access policy

Special Drawing Rights
 Nature of SDRs

 Allocation

 Utilization
Use of SDRs
1. Tansaction with designation

2. Transaction without designation

3. Transaction with the fund

INTERNATIONAL BANK FOR
RECONSTRUCTION AND
DEVELOPMENT (IBRD)
INTRODUCTION
 It is also known as World Bank.
 It is an offshoot Brettonwoods
Conference in 1944.
 It is a inter-governmental agency for
lending for development.
 Initial focus was on reconstruction of
war shattered European economies.
 Present focus is on development of
backward countries.
FUNCTIONS
 Assists in reconstruction and development
of territories of member government.
 It facilitate investment of capital for
productive purposes.
 Promotes foreign private investment by
guarantees of or through participation in
loans.
 Make loans from its own resources or from
the fund borrowed by it.
 It promote long range growth of trade and
maintain equilibrium in BOP.
LENDING ACTIVITIES
 By making or participating in direct
loans out of its own fund.
 By making or participating in direct
loans out of funds raised in the market
of a member, or otherwise borrowed by
the bank.
 By guaranteeing in whole or in part
loans made by private investors
through the usual investment channels.
POLICIES FOR LENDING LOANS
 All loans are made to government or they
must be guaranteed by governments.
 Repayment is to be made within 10 to 35
years.
 Loans are made only in circumstances in
which other sources are not readily
available.
 Investigation are made of the probability of
repayment, considering both the soundness
of the project and the financial
responsibility of the government.
Cont….
 Sufficient surveillance is maintained by
the bank over the carrying out of
project to assure that it is relatively
well executed and managed.
 Loans are sanctioned on economic and
not political considerations.
 The loan is meant to finance the
FOREX requirements of specific
projects.
ORGANISATION
 IBRD is an inter governmental organization.
 Only governments can be its members.
 Total members are 184.
 Five biggest share holders are USA, UK,
GERMANY, JAPAN & FRANCE.
 It have Board of Governors, Exec. Directors and
a President.
 President acts as a Chairman of Board of
Directors.
 Ultimate authority lies in BOG
 Voting rights are in proportion to the share
capital of the member countries which are
represented by Governors and Exec. Directors.
RESOURCES
 Initial authorized capital was USD 10,000
million, divided into 100,000 shares of USD
100,000 each. Of share capital-
 2% is payable by member country in gold or in
USD. This portion is freely available for lending.
 18% is payable in member’s own currency. This
portion is available for lending with consent of
member whose currency is involved.
 80% is kept in reserve to be paid by the member
when called.
 Total authorized capital as on June 1994 is
US$ 170 Bn.
 INTERNATIONAL
FINANCIAL CORPORATION
Introduction
 It is an affiliate of the IBRD
 IFC was established in 1956
 It shares the primary objective of all
World Bank Group institutions
 IFC is the largest multilateral source
of loan and equity financing for
private sector projects in the
developing world.
VISION

 Its vision is that people should have

the opportunity to escape poverty and
improve their lives.
Organisation
 Only members of the world bank can
become its members
 The powers of IFC are vested in the
board of Governors which normally
meets once in a year.
 The 22 Executive Directors of the
world bank constitute the Board of
Directors of the IFC
Member Countries
 IFC has 182 member countries.

To join IFC, a country must:

 Be a member of the World Bank

 Have deposited with the World Bank
Group's Corporate Secretariat an
Instrument of Acceptance of IFC's
Articles of Agreement.
Where IFC Works
 IFC invests in enterprises majority-owned
by the private sector throughout most
developing countries in the world.

Developing regions include:

 Sub-Saharan Africa
 East Asia & the Pacific
 South Asia
 Europe & Central Asia
 Latin America & the Caribbean
 Middle East & North Africa
 Primary Functions
It promotes sustainable private sector
development primarily by:
 Financing private sector projects and
companies located in the developing
world.
 Seeks to bring together investment
opportunities, private capital &
experienced management
 Providing advice and technical
assistance to businesses and
governments.
 It encourages joint ventures between
developed & developing countries
Development Activities

 Project Identification And Promotion

 Promoting financing private
enterprise
 Encouraging the growth of capital
markets in the developing countries
INVESTMENT RATIO

Its investment doesn’t exceed

 50% of the total investment of the
enterprise
If investment by Equity contribution it
doesn’t exceed
 25% of the share capital
Resources
 Capital contributed by its member
countries
 Accumulated reserve
 It can borrow from world bank
Evaluation
 It had a slow beginning
 Much of its assistance was
concentrated in Latin and central
American countries
 Now it has diversified its area of
operations in many developing
countries
 India has also received substantial
assistance from IFC
Thank you