The World Bank provides financial assistance in the following three forms

The World Bank provides financial assistance in the following three forms:

1. Loans out of Own Funds:

The World Bank can grant direct loans out of its own funds up to the 20% of the total subscribed capital. The Bank’s own funds consist of the contributions made by the members and the accumulated profits.

2. Loans out of Borrowed Capital:

The World Bank also provides direct loans out of its borrowed funds on the approval of the country, from which the funds have been borrowed,

3. Guarantee of Loans:

The World Bank lends indirectly by guaranteeing loans made by private investors. Thus, the Bank acts as guarantor between the lender and the borrower. In case of default by the borrower, the Bank may call up its uncalled reserves to cover the default.

The ultimate limit to the Bank’s lending operation is that the total outstanding loans and guarantees must not exceed the Bank’s total subscribed capital resources and surplus.