The World bank is playing the main role of providing loan for development work to member countries, Especially to underdeveloped countries. the World bank provide long term loan for various development project of 5 to 20 year duration the loaning system of the bank can be explained with the help of following points.
- bank and grant loan to member country up to 20% of its share in the paid up capital.
- Bank also provide loan to private investor belonging to member countries on its own guarantee, but for this loan private investor have to seek prior permission from those country where this amount will be collected, for such loans the consent of that country is also required whose currency is given in loans. for granting such guarantee, the bank charges 1% to 2% as service charge.
- the quantum of loan interest rate term and condition are determined by the bank itself
- generally the bank grant loan for a particular project duly submitted to the bank by the member country.
- the debtor Nation has to repay either in reserve currency or in the currency in which the loan was sanctioned.
besides granting loan for reconstruction and development World Bank also provide various technical service to the member countries for this purpose the bank has established the economic development Institute and a Staff College in Washington
