World Bank plays role as an admin and controls imports & exports among various countries. It sets certain required rules to be guided by facilitating payment procedures by means of IBRD and IDA.These are the two branches that control the transactions of funds very efficiently without causing any tiff between the importer and the exporters.

1. World Bank regulates imports and
exports in between various countries. It
sets certain mandatory guidelines to
follow for easing payment procedures
via IBRD and IDA.
Import and Export
Payment Methods

2. An international creditor to developing countries
It’s Goal: Making the world free of poverty.
Three Prime Roles:
 Promote foreign investment
 Promote international trade
 Provide facility of capital investment
World Bank

3. Two Branches of World Bank
International Bank of Reconstruction & Development (IBRD)
• Provides loans to under-developing countries’ middle-income group
International Development Association (IDA)
• Lends money to the poorest countries as grants and credits at no interest rate

4. Four methods are used in import and export business:
1. Banker’s Acceptance (BA)
2. Working Capital Financing
3. Medium-Term Capital Goods Financing
4. Countertrade
Methods of Finance

5. Role of Banker’s Acceptance (BA)
 For making payment to the importer.
 Time bound draft
 Importer’s bank clear it at maturity date
 BA can be encashed in the money market by selling it.
 Acceptor bank charges all-in-rate, including discount rate and commission.

6.  It is short terms loan.
 Helps in moving on working capital
 Done by purchasing inventory until it gets converted in cash
Role of Working Capital Financing

7. Role of Medium-Term Capital
Goods Financing
 It is a promissory note.
 Issued for 3 to 7 years.
 Issued to pay for importing capital goods
 Exporter sells it to banks without delay.

8.  Interlinking financial transaction
 It links export of goods to import of goods from the same country
 Types: Barter, Compensation and Counterpurchase
 Occurs between the government and the multinational traders
Role of Countertrade

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