The International Finance Corporation (IFC) | IAS Target IAS Target

The International Finance Corporation (IFC)

The International Finance Corporation (IFC) is an international financial institution that offers investment, advisory, and asset management services to encourage private-sector development in less developed countries. The IFC is a member of the World Bank Group. It is the private-sector arm of the World Bank Group, to advance economic development by investing in for-profit and commercial projects for poverty reduction and promoting development.

It is a corporation whose shareholders are member governments that offer paid-in capital and have the right to vote on its matters. Originally, it was more financially integrated with the World Bank Group, but later, the IFC was established separately and finally became authorized to operate as a financially-autonomous entity and make independent investment decisions.

It offers an array of debt and equity financing services and helps companies face their risk exposures while refraining from participating in a management capacity. The corporation also offers advice to companies on making decisions, evaluating their impact on the environment and society, and being responsible. It also advises governments on building infrastructure and partnerships to further support private sector development.

Established 1956
Headquartered Washington, D.C. in the United States
Membership 184 countries
Parent organization World Bank Group

The IFC aim

  • To increase sustainable agriculture opportunities, improve education and healthcare, increase access to financing for microfinance and business clients, advance infrastructure, help small businesses grow revenues, and invest in climate health.
  • To create opportunities for people to escape poverty and achieve better living standards by mobilizing financial resources for private enterprise, promoting accessible and competitive markets, supporting businesses and other private-sector entities, and creating jobs and delivering necessary services to those who are poverty stricken or otherwise vulnerable
  • Private sector development

Functions of IFC

  • Sustainability
  • Green buildings in less developed countries
  • Asset Management Company
  • Investment services
  • Advisory services
  • Financial performance

Criticism of IFC

  • It is not able to track its money because of its use of financial intermediaries
  • IFC working excessively with large companies or wealthy individuals already able to finance their investments without help from public institutions

Governance

  • The executive directors collectively represent all 184 member countries. When the IFC's Board of Directors votes on matters brought before it, each executive director's vote is weighted according to the total share capital of the member countries represented by that director.
  • The IFC is governed by its Board of Governors which meets annually and consists of one governor per member country (most often the country's finance minister or treasury secretary). Each member typically elects one governor and also one alternate.
  • The governors delegate most of their corporate powers and their authority over daily matters such as lending and business operations to the Board of Directors. The IFC's Board of Directors consists of 25 executive directors who meet regularly and work at the IFC's headquarters and is chaired by the President of the World Bank Group.

India and IFC

Insolvency and Bankruptcy Board of India signs a Cooperation Agreement with the International Finance Corporation to further build the capacity of the Insolvency Professionals, and Insolvency Professional Agencies for the purposes of the effective implementation of the Insolvency and Bankruptcy Code, 2016 among others.