World Bank – Objectives, Membership, Achievement, Failures of World Bank

Capital of the World Bank

Initially, the authorized capital of the World Bank was to the tune of $ 10,000 million, which was divided into 1,00,000 shares of $ 1,00,000 each. All these shares were made available to member countries only. As per the system of the Bank, out of each share.

(a) 2 per cent in payable in gold or U.S. dollars;

(b) 18 per cent of the subscription is to be paid in terms of member’s own currency;

(c) The remaining 80 per cent of the subscription is not immediately collected from the members but can be called up by the Bank as a Callabh fund whenever it requires to meet its obligation. Thus it is observed that only 20 per cent of the total capital is called by the Bank and the same is available for its lending purposes.

The capital of the World Bank has also been increased time to time with the consent of its members. After the admission of new members, the authorized capital of the Bank has been increased to $ 171 billion. In its annual meeting held in September 1983, the World Bank decided to go in for a selective capital increase of 8.4 billion dollars and accordingly the share holding of different member countries were suitably adjusted.

Management or Organization of World Bank

The organization of the World Bank is consisting of the Board of Governors, the Board of Executive Directors, the Loan Committee, the Advisory Committee, the President and other members of the staff. The management of the Bank is rested on the Board of Governors, the Executive Directors and the President.

Board of Governors

All powers of the Bank are vested with the Board of Governors. Being a general body of the Bank, the Board of Governors of the Bank is consisting of one Governor (generally the Finance Minister) and one alternate Governor (generally the Governor of the Central Bank) appointed by each member country for a term of five years. Each Governor has its voting power in relation to its financial contribution to the capital of the Bank. Normally, the Board is required to meet at least once in a year so as to chalk out the general policy of the Bank.

Executive Directors

The Board of Executive Directors are in charge of the general operations of the Bank. It is consisting of 21 Executive Directors, six of them are appointed by the six largest shareholders, namely, the U.S.A., the U.K., Germany, France, Japan and India. The remaining 15 members are elected by the remaining member countries.

Each Executive Director is holding voting power in proportion to their share of capital. This Board regularly meets once a month to carry on its routine works of the Bank. It also places its audited accounts, annual budget and Annual Report of the Bank of the Board of Governors every year in its annual meeting.


The President of the Bank is appointed by the Board of Executive Directors. The President works as the chief of the operating staff and is also responsible for the conduct of normal day-to-day business of the Bank. He is also subjected to the direction of the Executive Directors in respect of policy matters.


The Bank usually performs its functions with the help of two committees, i.e., Advisory Committee and the Loan Committee. The Advisory Committee is consisting of seven experts appointed by the Board of Governors. The Loan Committee is constituted by the Executive Directors and also consulted by the Bank for extending any loan to the member countries to examine the appropriateness of a loan.


The following are the major achievements of World Bank:

(i) Membership

The total membership of the Bank has increased from a mere 30 countries initially to 68 countries in 1960 and then to 151 countries in 1988.

(ii) Increase in Working Capital

The bank has been increasing its Working Capital from time to time. Accordingly, it has raised its capital by selling its securities and bonds at different times to different countries like USA, UK etc. Accordingly, its capital has trebled during the past 40 years. In September, 1987, the Bank approved on increase in general of 74.8 billion dollars in its capital and thereby raised its lendable resources to 170 billion dollars.

(iii) Increase in Subscribed Capital

The Bank has also raised its subscribed capital from $ 10,000 million initially to $ 19,300 million in 1960 and then to $ 91,436 million in 1988. As a result of following such process, the lending capacity of the Bank has expanded.

(iv) Loan Approval

The amount of approval of loan to the member countries has been increasing and accordingly the amount increased from $ 659 million in 1960 to $ 14,762 million in 1988.

(v) Loan Disbursement

The volume of loan disbursement by the Bank among its members has also been increasing and accordingly the volume of loan disbursement has increased from $ 544 million in 1960 to $ 11,636 million in 1988.

(vi) Total Loan

The World Bank has advanced a significant amount of loan to its member countries. During the past 40 years of its existence since inception (up to June, 1989) the Bank had lent to the extent of $ 1,36,596 million to 115 member countries for various developmental projects.

(vii) Loans for Productive Purposes

The World Bank is granting loans to member countries for productive purposes, especially for the development of agriculture, irrigation, electricity and transportation projects. Economic development of a country depends on the basic infrastructure. Therefore, the Bank is lending for these aforesaid projects for this rapid economic development.

(viii) Technical Assistance

As per provisions of the Bank, the World Bank has been sending technical missions to member countries for collecting necessary information regarding the functioning of their economies. The Bank has been giving technical assistance to its member countries in order to solve their complicated economic problems and for assessing economic resources of the country and setting up of priorities for development programmes.

(ix) New Loan Strategy

In recent years, the Bank has introduced new loan strategy for giving more emphasis of financing different schemes for influencing the well being of the poor masses of member developing countries, especially for the purpose of agricultural marketing, forestry, fishery, development of feeder roads in rural areas, rural electrification, spread of education in rural areas etc. In respect of industry, the Bank made provision for direct lending to industries, more emphasis on heavy industries, fertilizer industry, labour intensive small scale industry etc.

(x) Assistance to Underdeveloped Countries

The World Bank has been playing a special role for assisting the underdeveloped countries by undertaking special economic and welfare schemes in the form of:

(a) Financial assistance for the promotion of development;

(b) Developing ‘third window’ to advance loan at lower rate of interest to the underdeveloped countries;

(c) Providing technical assistance;

(d) Organizing meetings of creditor countries for providing loan to developing countries such as Aid India Club etc.;

(e) Setting up of subsidiary financial institutions like International Finance Corporation (IFC), International Development Association (IDA) for providing soft and concessional finance to developing countries etc.

(xi) Settlement of Disputes

The World Bank has been playing an important role in the settlement of international disputes successfully for the promotion of world peace. Accordingly it has resolved Indus river water dispute between India and Pakistan and Suez Canal dispute between England and Egypt.

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