International Finance Corporation

The International Finance Corporation was established in July, 1956, with the specific object of providing finance to the private sector. Though it is affiliated to the World Bank, it is a separate legal entity with a separate fund and functions. Members of the World Bank are eligible for its membership.

Objectives: IFC objective is to assist economic development by encouraging the growth of productive private enterprise in its member nations, particularly in the underdeveloped areas. Thus, it laid down the following objectives:

1. To invest in productive private enterprises, in association with private investors and without government guarantee of repayment, in cases where sufficient private capital is not available on reasonable terms.

2. To serve as a clearing house to bring together investment opportunities, private capital (both foreign and domestic) and experienced management. 

3. To help in stimulating the productive investment of private capital, both domestic and foreign.

The IFC considers only such investment proposals whose objective is establishment, expansion or improvement of productive private enterprise which will contribute to the development of the economy of the country concerned. Industrial, agricultural, financial, commercial and other private enterprises are eligible for IFC financing, provided their operations are productive in character.

The IFC is authorised to invest its funds in any form it deems appropriate, with the exception of capital stocks and shares. It does not have a policy of uniform the light of all relevant factors, including the risks involved and any right to participation in profits etc.

IFC makes investments only when it is satisfied that the enterprise has or will have experience and competent management and it looks to that management to conduct the business of the enterprise. It does not itself assume responsibility of managing the enterprise.

In India the IFC has so far made six investment commitments totaling over $7 million.

However the actual working of the IFC has been rather slow. That there is great scope for its work is quite evident for it resources and investment portfolios.

It may be hoped that IFC will in future be more fully able to play a dynamic investor role in the economic development of the poor nations.

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