What Are The Lending Activities of World Bank?

Bank’s Lending Activities

The Bank grants loans to members in any one or more of the following ways :

• by participating or granting direct loans out of its own funds;

• by granting loans out of funds raised in the financial market of a member or otherwise borrowed by the Bank, and

• by guaranteeing in whole or part, loans made by private investors through the investment channels.

The total outstanding amount of the total direct and indirect loans made or guaranteed by the Bank is not to exceed 100 per cent of its total unimpaired subscribed capital, resources and surplus. Bank imposes following conditions in granting loans:

• The bank its satisfied that the borrower is unable to borrow under reasonable conditions in the prevailing market conditions.

• The project for which loan is required should be recommended by the competent authority in the form of a written report after careful examination of the project.

• The loan is required for productive purposes.

• The borrower or guarantor has reasonable prospects of repaying loans and interest on loans,

• If the project is located on the territory of the member but itself is not a borrower, then the member or its central bank has to guarantee the repayment of loan, interest on loans and other charges on loan.

In 1991, the Executive Board of the Bank modified the repayment terms which include extension of repayment period from 3 to 5 years for middle income countries and review of repayment terms for middle in come countries within 3 years.