INTERNATIONAL FINANCIAL

INSTITUTIONS

BY SACHIN N. SHETTY
International Financial Institutions :

• IMF

• WORLD BANK

• ADB

• EXIM

• ECGB
Title

IMF
 Definition

• The International Monetary Fund (IMF) is the intergovernmental

organization that oversees the global financial system by
following the macroeconomic policies of its member countries; in
particular those with an impact on exchange rate and the balance
of payments.

• It is an organization formed with a stated objective of INTERNATIONAL MONETORY FUND

stabilizing international exchange rates and facilitating
development through the enforcement of liberalizing
economic policies on other countries as a condition for loans,
restructuring or aid.

• It also offers highly leveraged loans, mainly to poorer

countries.
 IMF Facts

• Membership: 187 countries.

• Headquarters: Washington, DC.

• Executive Board: 24 Directors representing countries or groups of countries.

• Staff: approximately 2,360 from 146 countries.

• Total quotas: US$333 billion (as of 2/28/10).

• Loans committed (as of 2/28/10): US$191 billion, of which US$121 billion have not been
drawn.

• Biggest borrowers (credit outstanding as of 2/28/10): Romania, Hungary, Ukraine.

 Background

• The International Monetary Fund was conceived in July 1944 during the United Nations
Monetary & Financial Conference, originally with 45 members,
with a goal to stabilize exchange rates and assist the reconstruction of the world's
international payment system.

• The Board of Governors, the highest decision-making body of the IMF, consists of one
governor and one alternate governor for each member country.

• The IMF describes itself as "an organization of 187 countries (as on July 2010), working
 To foster global monetary cooperation,
 Secure financial stability,
 Facilitate international trade,
 Promote high employment & sustainable economic growth,
 Reduce poverty.
 India’s relations with the IMF

• Current IMF membership: 186 countries.

• India Joined on December 27, 1945.

• Quota : SDR 4,158.20 million

• Outstanding loans: None

• India is 13th in voting rights.

 IMF Responsibilities:

• To ensure the stability of the international monetary system

• The system of exchange rates and international payments that enables countries (and their
citizens) to buy goods and services from each other.

• This is essential for sustainable economic growth, increasing living standards,

and alleviating poverty.

• SDRs: The IMF issues an international reserve asset known as Special Drawing Rights that
can supplement the official reserves of member countries.

• The IMF lends under Stand-by, Extended, and Flexible Credit Line arrangements, and
at reduced rates, under Poverty Reduction and Growth Trust and Exogenous Shocks
Facility arrangements.
IMF Lending arrangements as of
June 30, 2010:
Continued….
 WORLD BANK
WORLD BANK
 Definition

• An international organization dedicated to providing :

• Financing
• Advice
• Research
to developing nations to aid their economic advancement.

• The World Bank was created at the end of World War II as a

result of many European and Asian countries needing financing
to fund reconstruction efforts.

• Created out of the Bretton Woods agreement of 1944, the Bank

WORLD BANK
was successful in providing financing for these devastated
countries.

• Today, the Bank functions as an international organization that

attempts to fight poverty by offering developmental assistance to
middle and poor-income countries.
 WORLD BANK Facts

• Type: International organization.

• Purpose/Focus: Crediting.

• Membership: IBRD has186 countries & IDA has 168 members.

• President: Robert B. Zoellick.

• Parent Organization: World Bank Group.

• WB Comprises: World Bank comprises only two institutions:

• The International Bank for Reconstruction and Development (IBRD) &
• The International Development Association (IDA)
 Background
• World Bank is a term used to describe an international financial institution that provides:
• Leveraged loans to developing countries for capital programs.
• Reducing poverty.

• The World Bank is one of five institutions created at the Bretton Woods Conference in
1944.

• The term "World Bank" generally refers to the IBRD and IDA, whereas the World Bank
Group is used to refer to the institutions collectively.

• The World Bank Group (WBG) is a family of five international organizations :

 International Bank for Reconstruction and Development (IBRD).
 International Development Association (IDA).
 International Finance Corporation (IFC).
 Multilateral Investment Guarantee Agency (MIGA).
 International Centre for Settlement of Investment Disputes (ICSID).
that makes leveraged loans, generally to poor countries.
 Cont…d

• The Bank obtains funding for its operations primarily through the IBRD's sale of AAA-rated
bonds in the world's financial markets.

• The IBRD's income is generated from its :

• Lending activities.
• Borrowings leveraging its own paid-in capital.
• Investment of its "float".

• The IDA obtains the majority of its funds from:

 Forty donor countries who replenish the bank's funds every three years &
 Loan repayments which then become available for re-lending.
 WB goals :

Millennium Development Goals

• The World Bank's current focus is on the achievement of the Millennium Development
Goals (MDGs) by:
 Lending primarily to "middle-income countries" at interest rates which reflect a
small mark-up over its own (AAA-rated) borrowings from capital markets.

• The Bank's mission is to :

 Aid developing countries & their inhabitants to achieve development & the
reduction of poverty.
 Achievement of the MDGs by helping countries develop an environment for
investment, jobs and sustainable growth.

Thus promoting economic growth through investment and enabling the poor to share the
fruits of economic growth.
ASIAN DEVELOPMENT BANK
 Definition

• Founded in 1966, its headquarters are in Manila,

Philippines.

• The Asian Development Bank's primary mission is to :

• Foster growth &
• Co-operation among countries in the Asia-Pacific
Region. 

• It has been responsible for a number of major projects in

the region, raising capital through the international bond
markets.

• The two largest shareholders of the Asian Development

Bank are the United States and Japan. 
 ADB Facts

• Type: Regional organization.

• Purpose/Focus: Crediting.

• Membership: 67 countries.

• President: Haruhiko Kuroda.

• Formation: December 19, 1966

• Motto: Fighting poverty in Asia and the Pacific

 Background
• The Asian Development Bank (ADB) is a regional development
bank established in 1966 to promote economic and social development in Asian
and Pacific countries through loans and technical assistance.

• ADB's vision is a region free of poverty.

• Its mission is to help its developing member countries reduce poverty and
improve the quality of life of their citizens.

• The work of the Asian Development Bank (ADB) is aimed at improving the
welfare of the people in Asia and the Pacific.

• ADB raises funds through bond issues on the world's capital markets, while also
utilizing its members' contributions and earnings from lending.
 ADB Lending :

• ADB's annual project lending amounts to about US$7 billion per year with typical
lending per project being in the $100 million range

• Notable ADB projects and Technical Assistance

 Afghan Diaspora Project

 Loan of $1.2 billion to bail it out of an impending economic crisis in Pakistan & on-
going funding for the countries growing energy needs, specifically Hydro-power
projects.

 Micro finance support for private enterprises, in conjunction with governments,

including Pakistan and India.

 Earthquake and Tsunami Emergency Support Project in Indonesia

 EXIM
The Export-Import Bank of India
 Definition

• Export-Import Bank of India is the premier export finance institution of the country,
set up in 1982 under the Export-Import Bank of India Act 1981.

• Since its inception, Exim Bank of India has been both a catalyst and a key player in
the promotion of cross border trade and investment.

• Commencing operations as a purveyor of export credit, like other Export Credit

Agencies in the world, Exim Bank of India has, over the period, evolved into an
institution that plays a major role in partnering Indian industries, particularly the
Small and Medium Enterprises, in their globalization efforts, through a wide range
of products and services offered at all stages of the business cycle, starting from
import of technology and export product development to export production, export
marketing, pre-shipment and post-shipment and overseas investment.
 Background & Functions

• Exim Bank is managed by a Board of Directors, which has representatives from

the Government, Reserve Bank of India, Export Credit Guarantee Corporation
(ECGC) of India, a financial institution, public sector banks, and the business
community.

• The Bank's functions are segmented into several operating groups including:

 Corporate Banking Group which handles a variety of financing programmes for Export
Oriented Units (EOUs), Importers, and overseas investment by Indian companies.

 Project Finance / Trade Finance Group handles the entire range of export credit services
such as supplier's credit, pre-shipment Agri Business Group, to spearhead the initiative to
promote and support Agri-exports. The Group handles projects and export transactions in
the agricultural sector for financing.

 Small and Medium Enterprise: The group handles credit proposals from SMEs under
various lending programmes of the Bank.
 Cont…d

 Export Services Group offers variety of advisory and value-added information

services aimed at investment promotion
Export Marketing Services Bank offers assistance to Indian companies, to enable them
establish their products in overseas markets.

 The Support Services groups, which include: Research & Planning, Corporate Finance,
Loan Recovery, Internal Audit, Management Information Services, Information Technology,
Legal, Human Resources Management and Corporate Affairs.
 News Highlights

 Export-Import Bank of India, presented a cheque of Rs. 150.03 crore to Shri

Pranab Mukherjee, Hon’ble Finance Minister, Government of India, representing
return on capital to the Government for the financial year ended March 31, 2010.
The Bank made a post-tax profit of Rs. 513 crore for the financial year 2009-
2010.

 Bank’s paid-up capital is entirely subscribed by the Government of India.

 Exim Bank’s principal objective is to finance exports of projects, products and

services from India through a variety of financing programmes including Lines of
Credit to other countries and Buyer’s Credit to overseas importers to support
exports of goods and services from India.

 Exim Bank offers a comprehensive programme to support Indian investment

overseas. The Bank has also set up separate Groups for supporting Small and
Medium Enterprises and Rural Grassroot Business Initiatives. 
 ECGC
Export Credit Guarantee Corporation of India Limited 
 Definition

• ECGC is a company wholly owned by the Government of India.

• It provides export credit insurance support to Indian exporters and is controlled by

the Ministry of Commerce.

• Government of India had initially set up Export Risks Insurance Corporation (ERIC)

in July 1957. It was transformed into Export Credit and Guarantee Corporation
Limited (ECGC) in 1964 and to Export Credit Guarantee of India in 1983.

• Export Credit Guarantee Corporation of India is 51 years old, it was setup with the
primary objective to provide export credit insurance and trade related services to
exporters.
 EXIM FACTS

• Establishment: 30 July 1957.

• Motto: To promote exports.

• Admin control: Min of Commerce & Industry.

• Largest database on buyers 3 lakhs

• Largest credit limit Rs.80 Crores

• Largest claim paid Rs.120 crores & Quickest claim paid 2 days
 Background

• ECGC of India Ltd, was established in July, 1957 to strengthen the export
promotion by covering the risk of exporting on credit.

• It functions under the administrative control of the Ministry of Commerce &

Industry, Department of Commerce, Government of India.

• It is managed by a Board of Directors comprising representatives of the

Government, Reserve Bank of India, banking, insurance and exporting community.

• ECGC is the fifth largest credit insurer of the world in terms of coverage of national
exports. The present paid-up capital of the company is Rs.900 crores and
authorized capital Rs.1000 crores.
 Functions

• Provides a range of credit risk insurance covers to exporters against loss in

export of goods and services.

• Offers guarantees to banks and financial institutions to enable exporters to obtain

better facilities from them.

• Provides Overseas Investment Insurance to Indian companies investing in joint

ventures abroad in the form of equity or loan
 Cont…d

 How does ECGC help exporters :

 Offers insurance protection to exporters against payment risks.

 Provides guidance in export-related activities.

 Makes available information on different countries with its own credit ratings.

 Makes it easy to obtain export finance from banks/financial institutions.

 Assists exporters in recovering bad debts.

 Provides information on credit-worthiness of overseas buyers.

THANK YOU
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