COMPONENTS OF FINANCIAL SYSTEM : FINANCIAL INSTITUTIONS , FINANCIAL MARKETS , FINANACIAL SERVICES , FINANCIAL INSTRUMENTS , PARTICIPANTS OF FINNANCIAL SYSTEM , CLASSIFICATION OF FINANCIAL MARKET , CAPITAL MARKET , MONEY MARKET , FOREX MARKE, EURO CURRENCY MARKET , EORO BOND MARKET , FORWARD MARKET , FUTURE MARKET , IMF , WORLD BANK , WTO , IFC .

2. MEANING OF FINANCIAL SYSTEM
A financial system is a system that allows the transfer of money between
lenders and borrowers . It operates both at national and global levels .
COMPONENTS OF FINANCIAL SYSTEM
Financial system consists of four segments they are :
 Financial institutions
 Financial markets
 Financial instruments
 Financial services

3. FINANCIAL INSTITUTION
A financial institution is an institution that provides financial services for
its clients or members . One of the most important financial services
provided by a financial institution is acting as a financial intermediary .
Most financial institutions are regulated by the government .

4. TYPES OF FINANCIAL INSTITUTIONS
There are three major types of financial institutions:
 Depository institutions
 Contractual institutions
 Investment institutions
DEPOSITORY INSTITUTIONS
Deposit-taking institutions that accept and manage deposits and make
loans, including banks, building societies, credit unions, trust companies,
and mortgage loan companies .
CONTRACTUAL INSTITUTIONS
Insurance companies and pension funds .
INVESTMENT INSTITUTIONS
Investment banks , underwriters and brokerage firms .

5. FINANCIAL MARKETS
A financial market is a market in which people trade financial securities ,
commodities and other fungible items of value at low transaction costs
and at prices that reflect supply and demand .
Securities include stocks & bonds .
Commodities include precious metals or agricultural products .

6. ROLE OF FINANCIAL MARKET
The role of financial market are as follows :
 Transfer of resources
 Growth in income
 Productive usage
 Capital formation
 Price discovery
 Sale mechanism
 Information availability

7. TRANSFER OF RESOURCES
Financial markets facilitate the transfer of resources from one person to
another .
GROWTH IN INCOME
Financial markets allow lenders to earn interest/dividend on their surplus
investable funds , thus , contributing to the growth in their income .
PRODUCTIVE USAGE
Financial markets allow for the productive use of the funds used in
financial system thus enhancing the income and the GNP .
CAPITAL FORMATION
Financial markets provide a channel through which new savings flow to
aid capital formation of a country .
PRICE DISCOVERY
Financial market allows the for determination of the price of the tarded
financial asset through the interaction of different set of participants .

8. SALES MECHANISM
Financial markets provide a mechanism for selling of a financial asset by
an investor so as to offer the benefits of marketability and liquidity of
such assets .
INFORMATION AVAILABILITY
The information generated in financial market is useful to various parties
taking part in financial market .

9. FUNCTIONS OF FINANCIAL MARKET
The various functions of financial market are as follows :
 To facilitate creation and allocation of credit and liquidity .
 To serve a intermediary in the process of mobilization of savings in the
economy .
 To assist the process of economic development .
 To provide financial convenience to the people .
 Enabling economic units co exercise their time preference .
 Separation , distribution , diversification and reduction of risk .
 Efficient payment mechanism .
 Providing information about companies .
 Providing portfolio management services .

10. FINANCIAL INSTRUMENTS
A financial instrument is a tradable asset of any kind ; either cash ,
evidence of an ownership interest in an entity , or a contractual right to
receive or deliver cash or another financial instrument .

11. FEATURES OF FINANCIAL INSTRUMENTS
The features of financial instruments are :
 Easy transferability
 Ready market
 Possess liquidity
 Possess security value
 Enjoy tax status
 Carry risk
 Facilitate futures trading
 Less handling costs
 Risk and return proportionate
 Maturity period variations

12. TYPES OF FINANCIAL INSTRUMENTS
Financial instruments can be classified as :
 Cash instruments
 Derivative instrument
CASH INSTRUMENTS
They are financial instruments whose value is determined directly by the
markets . They can be securities , which are readily transferable, and
instruments such as loans and deposits , where both borrower and lender
have to agree on a transfer.
DERIVATIVE INSTRUMENTS
They are financial instruments which derive their value from the value
and characteristics of one or more underlying entities such as an asset ,
index , or interest rate. They can be exchange-traded derivatives and
over-the-counter (OTC) derivatives .

13. ASSET CLASS
INSTRUMENT TYPE
SECURITIES OTHER CASH
EXCHANGE
TRADED
DERIVATIVES
OTC DERIVATIVES
Debt (long term)
> 1 year
Bonds  Loans
 Bond futures
 Options on bond
futures
 Interest rate swaps
 Interest rate caps and floors
 Interest rate options
 Exotic derivatives
Debt (short
term)
≤ 1 year
Bills
 Deposits
 Certificates of
deposit
 Short-term
interest rate
futures
 Forward rate agreements
Equity Stock N/A
 Stock options
 Equity futures
 Stock options
 Exotic derivatives
Foreign
exchange
N/A
 Spot foreign
exchange
 Currency futures
 Foreign exchange options
 Outright forwards
 Foreign exchange swaps
 Currency swaps
Alternatively, financial instruments may be categorized by "asset class"
depending on whether they are equity based or debt based. If it is debt, it
can be further categorized into short term or long term. Foreign exchange
instruments and transactions are neither debt nor equity based and belong
in their own category.

14. FINANCIAL SERVICES
Financial services are the economic services provided by the finance
industry, which encompasses a broad range of businesses that manage
money, including credit unions, banks, credit-card companies, insurance
companies, accountancy companies, consumer-finance companies, stock
brokerages , investment funds and some government-sponsored
enterprises .

15. TYPES OF FINANCIAL SERVICES
The types of financial services are :
 Commercial banking services
 Investment banking services
 Foreign exchange services
 Investment services
 Insurance services
 Other financial services

16. COMMERCIAL BANKING SERVICES
 Keeping money safe while also allowing withdrawals when needed
 Issuance of cheque books so that bills can be paid and other kinds of
payments can be delivered by post
 Provide personal loans, commercial loans, and mortgage loans
(typically loans to purchase a home, property or business)
 Issuance of credit cards and processing of credit card transactions and
billing
 Issuance of debit cards for use as a substitute for cheques .
 Allow financial transactions at branches or by using Automatic Teller
Machines (ATMs)
 Provide wire transfers of funds and Electronic fund transfers between
banks
 Facilitation of standing orders and direct debits, so payments for bills
can be made automatically

17.  Provide overdraft agreements for the temporary advancement of the
bank's own money to meet monthly spending commitments of a
customer in their current account.
 Provide internet banking system to facilitate the customers to view and
operate their respective accounts through internet.
 Provide charge card advances of the bank's own money for customers
wishing to settle credit advances monthly.
 Provide a check guaranteed by the bank itself and prepaid by the
customer, such as a cashier's check or certified check .

18. INVESTMENT BANKING SERVICES
 Capital markets services - underwriting debt and equity , assist
company deals (advisory services, underwriting, mergers and
acquisitions and advisory fees), and restructure debt into structured
finance products.
 Private banking - Private banks provide banking services exclusively
to high-net-worth individuals . Many financial services firms require a
person or family to have a certain minimum net worth to qualify for
private banking services. Private banks often provide more personal
services, such as wealth management and tax planning, than normal
retail banks.
 Brokerage services - facilitating the buying and selling of financial
securities between a buyer and a seller. In today's (2014) stock brokers,
brokerages services are offered online to self trading investors
throughout the world who have the option of trading with 'tied' online
trading platforms offered by a banking institution or with online
trading platforms sometimes offered in a group by so-called online
trading portals .

19. FOREIGN EXCHANGE SERVICES
Foreign exchange services are provided by many banks and specialist foreign exchange
brokers around the world. Foreign exchange services include:
 Currency exchange - where clients can purchase and sell foreign currency banknotes.
 Wire transfer - where clients can send funds to international banks abroad.
 Remittance - where clients that are migrant workers send money back to their home
country.
INVESTMENT SERVICES
 Investment management - the term usually given to describe companies which run
collective investment funds. Also refers to services provided by others, generally
registered with the Securities and Exchange Commission as Registered Investment
Advisors. Investment banking financial services focus on creating capital through
client investments.
 Hedge fund management - Hedge funds often employ the services of "prime
brokerage" divisions at major investment banks to execute their trades.
 Custody services - the safe-keeping and processing of the world's securities trades
and servicing the associated portfolios. Assets under custody in the world are
approximately US$100 trillion.

20. INSURANCE SERVICES
 Insurance brokerage - Insurance brokers shop for insurance (generally
corporate property and casualty insurance) on behalf of customers.
Recently a number of websites have been created to give consumers
basic price comparisons for services such as insurance, causing
controversy within the industry.
 Insurance underwriting - Personal lines insurance underwriters actually
underwrite insurance for individuals, a service still offered primarily
through agents, insurance brokers, and stock brokers . Underwriters
may also offer similar commercial lines of coverage for businesses.
Activities include insurance and annuities, life insurance, retirement
insurance, health insurance, and property & casualty insurance .
 F&I - Finance & Insurance, a service still offered primarily at asset
dealerships. The F&I manager encompasses the financing and insuring
of the asset which is sold by the dealer. F&I is often called "the second
gross" in dealerships who have adopted the model
 Reinsurance - Reinsurance is insurance sold to insurers themselves, to
protect them from catastrophic losses.

21. OTHER FINANCIAL SERVICES
 Bank cards - include both credit cards and debit cards. According to
the Nilson Report, Bank Of America is the largest issuer of bank cards.
 Credit card machine services and networks - Companies which provide
credit card machine and payment networks call themselves "merchant
card providers".
 Intermediation or advisory services - These services involve stock
brokers (private client services) and discount brokers. Stock brokers
assist investors in buying or selling shares. Primarily internet-based
companies are often referred to as discount brokerages, although many
now have branch offices to assist clients. These brokerages primarily
target individual investors. Full service and private client firms
primarily assist and execute trades for clients with large amounts of
capital to invest, such as large companies, wealthy individuals, and
investment management funds.
 Private equity - Private equity funds are typically closed-end funds,
which usually take controlling equity stakes in businesses that are
either private, or taken private once acquired. Private equity funds
often use leveraged buyouts (LBOs) to acquire the firms in which they
invest. The most successful private equity funds can generate returns
significantly higher than provided by the equity markets.

22.  Venture capital is a type of private equity capital typically provided by
professional, outside investors to new, high-growth-potential
companies in the interest of taking the company to an IPO or trade sale
of the business.
 Angel investment - An angel investor or angel (known as a business
angel or informal investor in Europe), is an affluent individual who
provides capital for a business start-up, usually in exchange for
convertible debt or ownership equity. A small but increasing number of
angel investors organize themselves into angel groups or angel
networks to share resources and pool their investment capital.
 Conglomerates - A financial services company, such as a universal
bank, that is active in more than one sector of the financial services
market e.g. life insurance, general insurance, health insurance, asset
management, retail banking, wholesale banking, investment banking,
etc. A key rationale for the existence of such businesses is the
existence of diversification benefits that are present when different
types of businesses are aggregated i.e. bad things don't always happen
at the same time. As a consequence, economic capital for a
conglomerate is usually substantially less than economic capital is for
the sum of its parts.

23.  Financial market utilities - Organizations that are part of the
infrastructure of financial services, such as stock exchanges, clearing
houses, derivative and commodity exchanges and payment systems
such as real-time gross settlement systems or interbank networks .
 Debt resolution is a consumer service that assists individuals that have
too much debt to pay off as requested, but do not want to file
bankruptcy and wish to pay off their debts owed. This debt can be
accrued in various ways including but not limited to personal loans,
credit cards or in some cases merchant accounts.

24. PARTICIPANTS OF FINANCIAL SYSTEM
The participants and players of financial system are :
 Individuals
 Firms or Corporates
 Government
 Regulators
 Market intermediaries

25. INDIVIDUALS
These are net savers and purchase the securities issued by corporates .
Individuals provide funds by subscribing to these securities or by making
other investments .
FIRMS AND CORPORATES
The corporate are net borrowers . They require funds for different
projects from time to time . They offer different types of securities to suit
the risk preferences of investors . Sometimes , the corporates invest
excess funds , as individuals do . The funds raised by issue of securities
are invested in real assets like plant and machinery . The income
generated by these real assets is distributed as interest or dividends to the
investors who own the securities .
GOVERNMENT
Government may borrow funds to take care of the budget deficit or as a
measure of controlling the liquidity etc., Government may require funds
for long terms or short terms in the money market .

26. Government makes initial investments in public sector enterprises by
subscribing to the shares , however , these investment (shares) may be
sold to public through the process of disinvestments .
REGULATORS
Financial system is regulated by different government agencies . The
relationships among other participants , the trading mechanism and the
overall flow of funds are managed , supervised and controlled by these
statutory agencies .
In India , two basic agencies regulating the financial market are :
 RBI
 SEBI
Besides , there is an array of legislations and government departments
also regulate the operations in the financial system .

27. MARKET INTERMEDIARIES
There are a number of market intermediaries known as financial
intermediaries or merchant bankers , operating in financial system .
These are also known as investment managers or investment bankers .
The objective of these intermediaries is to smoothen the process of
investment and to establish a link between the investors and the users of
funds . Market intermediaries help investors to select investments by
providing investment consultancy , market analysis and credit rating of
investment instruments .
Some of the market intermediaries are clearing corporations , share
brokers , credit rating agencies , underwriters , portfolio managers ,
mutual funds , investment companies .

28. CLASSIFICATION OF FINANCIAL MARKETTION
OF FINANCIAL MARKET
Financial market
Capital market Money market
Primary
market
secondary
market
 Call money market
 Treasury bills
 Commercial papers
 Certificate of deposits
 Repurchase agreement
 Reverse repos
 Commercial bill market
 Govt . Securities market
 Inter-corporate deposits

29. MEANING OF CAPITAL MARKET
Capital market is a place where the medium-term and long-term financial
needs of business and other undertakings are met by financial institutions
which supply medium and long-term resources to borrowers .
FEATURE OF CAPITAL MARKET
The features of capital market are as follows :
 It deals in long and medium term funds .
 It acts as a link between savers and investors .
 It makes funds available to industrial and commercial undertakings .
 It helps in mobilizing the savings on a large scale .
 It helps in the capital formation in the country .
 It helps in effective distribution of the mobilized funds for balanced
economic development .

30. TYPES OF CAPITAL MARKET
the types of capital market are :
 Primary market
 Secondary market
PRIMARY MARKET
The primary market is the part of the capital market that deals with
issuing of new security finance securities. Companies, government or
public sector institutions can obtain funds through the sale of a new stock
or bond issues through primary market.
SECONDARY MARKET
The secondary market is the financial market in which previously issued
financial instruments such as stock or bonds are bought and sold .

31. MONEY MARKET
Money market refers to the market where money and highly liquid
marketable securities are bought and sold having a maturity period of
one or less than one year .
FEATURE OF MONEY MARKET
The features of money market are :
 It is a market purely for short-term funds or financial assets called near
money .
 It deals with financial assets having a maturity period of one year .
 It provides room for overcoming short-term deficits .
 It deals with only those assets which can be converted into cash readily
without loss and with minimum transaction cost .
 Transactions have to be conducted without the help of brokers .
 It helps in maintaining monetary equilibrium .

32. INSTRUMENTS OF MONEY MARKET
 Certificate of deposit – Time deposit, commonly offered to consumers
by banks, thrift institutions, and credit unions.
 Repurchase agreements – Short-term loans—normally for less than
two weeks and frequently for one day—arranged by selling securities
to an investor with an agreement to repurchase them at a fixed price on
a fixed date.
 Commercial paper – Short term use of promissory notes issued by
company at discount to face value and redeemed at face value
 Eurodollar deposit – Deposits made in U.S. dollars at a bank or bank
branch located outside the United States.
 Federal agency short-term securities – In the U.S., short-term
securities issued by government sponsored enterprises such as the
Farm Credit System , the Federal Home Loan Banks and the Federal
National Mortgage Association .
 Federal funds – In the U.S., interest-bearing deposits held by banks
and other depository institutions at the Federal Reserve ; these are
immediately available funds that institutions borrow or lend, usually
on an overnight basis. They are lent for the federal funds rate.

33.  Municipal notes – In the U.S., short-term notes issued by
municipalities in anticipation of tax receipts or other revenues.
 Treasury bills – Short-term debt obligations of a national government
that are issued to mature in three to twelve months.
 Money funds – Pooled short-maturity, high-quality investments which
buy money market securities on behalf of retail or institutional
investors.
 Foreign exchange swaps – Exchanging a set of currencies in spot date
and the reversal of the exchange of currencies at a predetermined time
in the future.
 Short-lived mortgage- and asset-backed securities

34. DIFFERENCE BETWEEN MONEY AND CAPITAL MARKET
Basis for
Comparison
Money Market Capital Market
Meaning
A segment of the financial
market where lending and
borrowing of short term
securities are done.
A section of financial market where
long term securities are issued and
traded.
Nature of
Market
Informal Formal
Financial
instruments
Treasury Bills, Commercial
Papers, Certificate of Deposit,
Trade Credit etc.
Shares, Debentures, Bonds,
Retained Earnings, Asset
Securitization, Euro Issues etc.
Risk Factor Low Comparatively High
Time Factor Within a year More than a year
Merit
Increases liquidity of funds in
the economy.
Mobilization of Savings in the
economy.
Return on
Investment
Less Comparatively high

35. FOREX MARKET
The foreign exchange market (forex, FX, or currency market) is a global
decentralized market for the trading of currencies. This includes all
aspects of buying, selling and exchanging currencies at current or
determined prices. In terms of volume of trading, it is by far the largest
market in the world.

36. EURO CURRENCY MARKET
'Eurocurrency Market' The money market in which Eurocurrency,
currency held in banks outside of the country where it is legal
tender, is borrowed and lent by banks in Europe.

37. EURO BOND MARKET
A market in which bonds are issued in the capital market of one country
to a non-resident borrower from another country .
Eurobonds are bonds that are sold in countries other than the country of
the currency denominating the bonds .
FORWARD MARKET
The forward market is over-the-counter financial market in contracts for
future delivery .
A forward contract is a non-standardized contract between two parties to
buy or to sell an asset at a specified future time at a price agreed upon
today .
FUTURE MARKET
An agreement to buy or sell a specific amount of a commodity or
financial instrument at a particular price on a stipulated future date ; the
contract can be sold before the settlement date .

38. IMF
The International Monetary Fund (IMF) is an international
organization headquartered in Washington, DC, of "188 countries
working to foster global monetary cooperation, secure financial stability,
facilitate international trade, promote high employment and sustainable
economic growth, and reduce poverty around the world". Formed in
1944 at the Bretton Woods Conference, it came into formal existence in
1945 with 29 member countries and the goal of reconstructing the
international payment system. Countries contribute funds to a pool
through a quota system from which countries with payment imbalances
can borrow. As of 2010, the fund had XDR476.8 billion, about US$755.7
billion at then-current exchange rates.
Through this fund, and other activities such as statistics keeping and
analysis, surveillance of its members' economies and the demand for
self-correcting policies, the IMF works to improve the economies of its
member countries .The organization's objectives stated in the Articles of
Agreement are: to promote international economic cooperation,
international trade, employment, and exchange-rate stability, including
by making financial resources available to member countries to meet
balance-of-payments needs.

39. LOGO
BUILDING OF IMF

40.  Membership: 188 countries
 Headquarters: Washington, D.C.
 Executive Board: 24 Directors each representing a single country or a
group of countries
 Staff: Approximately 2,600 from 147 countries
 Total quotas: US$327 billion (as of 3/13/15)
 Additional pledged or committed resources: US$ 885 billion
 Committed amounts under current lending arrangements (as of
3/13/15): US$163 billion, of which US$137 billion have not been
drawn (see table).
 Biggest borrowers (amounts outstanding as of 3/13/15): Portugal,
Greece, Ireland, Ukraine
 Biggest precautionary loans (amount agreed as of 3/13/15): Mexico,
Poland, Colombia, Morocco
 Surveillance consultations: 122 consultations in 2013 and 129 in 2014
 Technical assistance: 274 person years in FY2013 and 285 in FY2014

41. OBJECTIVES OF IMF
 To promote international monetary cooperation.
 To facilitate the expansion of international trade.
 To ensure stability to foreign exchange rates.
 To reduce disequilibrium in the international balance of payments of
member countries.
 To promote capital investment in backward and underdevelopment
countries.
 To assist in the establishment of a multinational system of payments in
respect of current transactions between the member countries.
 To secure multilateral convertibility (i.e., to convert the currency of
any member into the currency of any other member).
 To provide short term monetary help to members during emergency.
 To achieve balanced economic growth and high level of employment
in member countries.

42. WORLD BANK
The World Bank is an international financial institution that provides
loans to developing countries for capital programs . It comprises two
institutions: the International Bank for Reconstruction and Development
(IBRD) and the International Development Association (IDA). The
World Bank is a component of the World Bank Group, and a member of
the United Nations Development Group.
The World Bank's official goal is the reduction of poverty. According to
its Articles of Agreement, all its decisions must be guided by a
commitment to the promotion of foreign investment and international
trade and to the facilitation of Capital investment .

43. Motto
Working for a World Free of
Poverty
Formation
July 1944; 71 years
ago (1944-07)
Type
Monetary International
Financial Organization
Legal status Treaty
Purpose Crediting
Headquarters
Washington D.C., United
States
Region Worldwide
Membership
188 countries (IBRD)
172 countries (IDA)
Parent organization World Bank Group

44. OBJECTIVES OF WORLD BANK
 To provide long-run capital to member countries for economic
reconstruction and development.
 To induce long-run capital investment for assuring Balance of
Payments equilibrium and balanced development of international
trade.
 To provide guarantee for loans granted to small and large units and
other projects of member countries.
 To ensure the implementation of development projects so as to bring
about a smooth transference from a war-time to peace economy.
 To promote capital investment in member countries by the following
ways:
 To provide guarantee on private loans or capital investment.
 If private capital is not available even after providing guarantee, then
IBRD provides loans for productive activities on considerate
conditions.

45. FUNCTIONS OF WORLD BANK
 Granting reconstruction loans to war devastated countries
 Granting development loans to developing countries .
 To make sure of availability of funds .
 Providing loans to governments for agriculture , irrigation , power ,
transport , water supply , education , life and health .
 Providing loans to private specified projects .
 Promoting foreign investment by guaranteeing loans provided by other
organizations .
 Provide technical , monetary , fiscal advice to member countries for
specified projects .
 Encouraging industrial development of UDC’s by encouraging
economic reforms .

46. WTO
The World Trade Organization (WTO) is an intergovernmental
organization which regulates international trade. The WTO officially
commenced on 1 January 1995 under the Marrakesh Agreement, signed
by 123 nations on 15 April 1994, replacing the General Agreement on
Tariffs and Trade (GATT), which commenced in 1948.[5] The WTO deals
with regulation of trade between participating countries by providing a
framework for negotiating trade agreements and a dispute resolution
process aimed at enforcing participants' adherence to WTO agreements,
which are signed by representatives of member governments[6]:fol.9–10 and
ratified by their parliaments. Most of the issues that the WTO focuses on
derive from previous trade negotiations, especially from the Uruguay
Round (1986–1994).
The WTO is attempting to complete negotiations on the Doha
Development Round, which was launched in 2001 with an explicit focus
on developing countries. As of June 2012, the future of the Doha Round
remained uncertain: the work program lists 21 subjects in which the
original deadline of 1 January 2005 was missed, and the round is still
incomplete

47. The conflict between free trade on industrial goods and services
but retention of protectionism on farm subsidies to domestic
agricultural sector (requested by developed countries) and the
substantiation of fair trade on agricultural products (requested by
developing countries) remain the major obstacles. This impasse
has made it impossible to launch new WTO negotiations beyond
the Doha Development Round. As a result, there have been an
increasing number of bilateral free trade agreements between
governments. As of July 2012, there were various negotiation
groups in the WTO system for the current agricultural trade
negotiation which is in the condition of stalemate.
The WTO's current Director-General is Roberto Azevêdo ,who
leads a staff of over 600 people in Geneva, Switzerland. A trade
facilitation agreement known as the Bali Package was reached by
all members on 7 December 2013, the first comprehensive
agreement in the organization's history.

48. Formation
1 January 1995; 20 years
ago (1995-01-01)
Type International trade organization
Purpose Regulate international trade
Headquarters
Centre William Rappard, Geneva,
Switzerland
Coordinates
46°07′N 6°05′E/ 46.12°N 6.09°E/
46.12; 6.09Coordinates: 46°07′N
6°05′E/ 46.12°N 6.09°E/ 46.12;
6.09
Region served Worldwide
Membership 161 member states
Official language English, French, Spanish
Director-General Roberto Azevêdo
Budget
196 million Swiss francs (approx.
209 million US$) in 2011.
Staff 640

49. OBJECTIVES OF WTO
 To reduce the restriction on trade and service barrier .
 To raise the standard of living .
 To promote full employment .
 To expand production and trade .
 To optimize utilization of world resources .
 To sustainable development and environment to gather .
 To secure better share of growth and developing countries in the world
trade .
 To remove multilateral trade agreements .

50. FUNCTIONS OF WTO
 It promotes welfare of the people .
 To improve the quality of life .
 To develop region socially , culturally , economically .
 It promotes and strengthens collective self-reliance among the
developing countries .
 It strengthens co-operation with other developing countries .
 It co-operates with international and regional organizations with
similar aims and purposes .
 It maintains trade related data base .
 It creates and enhances mutual trust , understanding and application of
one another issues .

51. 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
developing countries. The IFC is a member of the World Bank
Group and is headquartered in Washington, D.C., United States. It
was established in 1956 as the private sector arm of the World
Bank Group to advance economic development by investing in
strictly for-profit and commercial projects that purport to reduce
poverty and promote development. The IFC's stated aim is 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. Since 2009, the IFC has
focused on a set of development goals that its projects are
expected to target. Its goals are to increase sustainable
agriculture opportunities, improve health and education, increase
access to financing for microfinance and business clients,
advance infrastructure, help small businesses grow revenues, and
invest in climate health.

52. The IFC is owned and governed by its member countries, but has its own executive
leadership and staff that conduct its normal business operations. It is a corporation
whose shareholders are member governments that provide paid-in capital and which
have the right to vote on its matters. Originally more financially integrated with the
World Bank Group, the IFC was established separately and eventually 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 advises governments on building infrastructure and partnerships to
further support private sector development.
The corporation is assessed by an independent evaluator each year. In 2011, its
evaluation report recognized that its investments performed well and reduced poverty,
but recommended that the corporation define poverty and expected outcomes more
explicitly to better-understand its effectiveness and approach poverty reduction more
strategically. The corporation's total investments in 2011 amounted to $18.66 billion. It
committed $820 million to advisory services for 642 projects in 2011, and held $24.5
billion worth of liquid assets. The IFC is in good financial standing and received the
highest ratings from two independent credit rating agencies in 2010 and 2011.

53. Formation July 24, 1956
Type Development finance institution
Legal status Treaty
Purpose
Private sector development, Poverty
reduction
Headquarters Washington, D.C.
Membership 184 countries
Executive Vice President & CEO Jin-Yong Cai
Parent organization World Bank Group

54. OBJECTIVES OF IFC
 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.
 To serve as a clearing house to bring together investment
opportunities, private capital (both foreign and domestic) and
experienced management.
 To help in stimulating the productive investment of private capital,
both domestic and foreign.