Mc 202 international business environment

1. Presented by : Sangeeta Saini
M. Com
641

2.  Introduction of International monetary fund.
 Objectives of IMF.
 Membership of IMF.
 Functions of IMF.
 IMF and India.
 Conclusion .

3.  International monetary conference was
convened in 1944,at Bretton Woods in
America. It was attended by the
representatives of 44 countries. India also
participated therein. It was decided in this
conference that two institutes to be set up
for the economic development of all
countries.
 1. International monetary fund.
 2. World bank.

4. IMF was founded on 27 December
1945.
The fund was established to promote
international monetary cooperation
and exchange stability.
On 2016-2017, the number of
member countries of IMF is 189.
Its headquarters are in Washington
DC ,USA.

5.  To promote International monetary
cooperation.
 To abolish exchange restrictions.
 To provide aid to members during emergency.
 To help in profitable investment of capital.
 To reduce disequilibrium in balance of
payment.
 To maintain stability in exchange rate.

6. Membership
Original
members
Ordinary
members

7. 1.Lending for meeting temporary
unfavourable balance of
payment position: Each member nation
can borrow up to 200% of its quota annually and
600% of its quota cumulatively. These lending are
to be paid back in 3 to 5 years
2.Purchase and sale foreign
currency : In any one year a member
country can purchase from the fund foreign
currency up to the maximum of 25 % of quota .
But in some cases IMF can raise this limit to even
100% of quota.

8. 3. Bank of central banks : just as a
central bank holds the cash reserves of the
commercial banks of the country, likewise IMF also
holds the reserves of the central banks of the
member countries.
4. Poverty reduction : for helping low
income countries having extreme poverty ,IMF has
set up a special fund . In this fund ,contribution is
received from developed nations and from
emerging developing nations. India is also
contributing US $1 million per year in this fund.

9.  Compensatory and contingency financing
facility .
 Structural adjustment facility: Under this
scheme , the rate of interest is between 0.5%
to 1% per annum .
 Enhanced structural adjustment facility :
Under this scheme , a member can take loans
upto 425% of its quota.
6.Facilities during emergency.

10.  India is a founder member of IMF.
 The exchange rate in India determined by
market forces of demand and supply of
foreign currency.
 On the basis of quota of SDRs , India's rank is
11th among the 189 countries.

11. Rank Countries % share in total SDR
quota
1. U.S.A. 17.77
2. Japan 6.59
3. Germany 6.14
4. France 4.53
5. UK 4.53
6. China 4.02
7. Italy 3.32
8. Saudi Arabia 2.95
9. Canada 2.69
10. Russia 2.51
11. India 2.46
12. Brazil 2.20

12.  Facility of foreign exchange.
 Membership of world bank.
 Importance of India in International sectors.
 Special drawing rights : India’s quota of SDRs was
raised from 40 crore to 582 crore SDRs in 2009 .
Now India’s quota of SDRs is 1311.44 crore.
 India –IMF joint training institute : In July 2004,
India and IMF joint training institute was started
. This institute provides policy oriented training
in economic and related areas . The first training
programme was held during July 2006.
 Help during emergency

13.  In short, we can say that India has gained in
many ways being a member of IMF
1. India has received help to correct its
balance of payment disequilibrium.
2. On account of its membership of the fund ,
India has also become a member of world
bank.
3. India has received technical assistance and
financial assistance.
4. India has a key role in policy making of
fund.