Multilateral Development Banks (MDBs) in India

December 22, 2023

GS Paper III Indian Economy

Context: Indian Finance Minister met the World Bank Group President and discussed the possible role of Multilateral Development Banks in various sectors of India.

The Chief of the World Bank and the Finance Minister hold talks on the involvement of Multilateral Development Banks in India

During the G20 Presidency of India, the Independent Expert Group (IEG), recommended a triple agenda to harness the potential of Multilateral Development Banks (MDBs).
- The Triple Agenda includes
  - Eliminating extreme poverty
  - Boosting shared prosperity and contributing to global public goods,
  - Tripling sustainable lending levels by 2030, and creating a flexible funding mechanism.
A task force team to study recommendations by the IEG has been formed by the World Bank.

About World Bank

Objective: To provide financial assistance to countries for their development.
Origin: The World Bank was created in 1944 from the Bretton Woods Agreement.
Headquarters: Washington DC, US.
It is a group of five institutional organizations, consisting of:
- The International Bank for Reconstruction and Development (IBRD);
- International Development Association (IDA);
- The International Finance Corporation (IFC);
- Multilateral Investment Guarantee Agency (MIGA);
- International Centre for Settlement of Investment Disputes (ICSID)
The IBRD and IDA together are known as the World Bank. All 5 institutions together are known as the World Bank Group.
Relation to UN: The World Bank is related to the UN; however, it is not accountable either to the General Assembly or to the Security Council.
Funding: The Bank obtains the funds from contributions by the members, bonds floated in the world’s capital market, and net earnings accrued from interest payments on loans.

What are Multilateral Development Banks?

Definition: MDBs are financial institutions that provide financial loans and grants to developing countries for their economic and social growth.
- For Example World Bank, the Asian Development Bank, the African Development Bank, the Inter-American Development Bank, etc

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News Source: Business Standard