• The executive directors of the World Bank selected Ajay Banga as president of the World Bank for a five-year term beginning June 2, 2023.

• He will become the first-ever Indian-American to head the global financial institution.

• The bank has historically been headed by someone from the United States, its largest shareholder, while a European heads the International Monetary Fund (IMF).

• In February, President Joe Biden had announced that the US would be nominating Banga, 63, to lead the World Bank.

• The president of the World Bank Group is also the Chair of the Board of the executive directors of the International Bank for Reconstruction and Development (IBRD). 

• The president is also ex officio chair of the Board of Directors of the International Development Association (IDA), International Finance Corporation (IFC), the Multilateral Investment Guarantee Agency (MIGA), and of the Administrative Council of the International Centre for Settlement of Investment Disputes (ICSID).

Who is Ajay Banga?

• Ajay Banga most recently served as Vice Chairman at General Atlantic.

• Previously, he was President and CEO of Mastercard, leading the company through a strategic, technological and cultural transformation. 

• Born in Pune, Ajay Banga graduated in economics from St. Stephen’s College, Delhi University, followed by PGP in management (equivalent to MBA) from the Indian Institute of Management, Ahmedabad.

• He started his career with Nestle and went on to work with Citigroup in India and Malaysia. In 1996, he moved to the US and joined Pepsico.

• In 2006, Banga became the president of Mastercard. 

• He was awarded the Padma Shri in 2016.

• In January 2022, he assumed the responsibility at General Atlantic as its vice chairman.

• He was honorary chairman of the International Chamber of Commerce, serving as chairman from 2020-2022. 

• He became an adviser to General Atlantic’s climate-focused fund, BeyondNetZero, at its inception in 2021. 

• Banga served as Co-Chair of the Partnership for Central America, a coalition of private organisations that works to advance economic opportunity across underserved populations in El Salvador, Guatemala, and Honduras. He was previously on the Boards of the American Red Cross, Kraft Foods, and Dow Inc.

• Ajay Banga is a co-founder of The Cyber Readiness Institute and was Vice Chair of the Economic Club of New York. He was awarded the Foreign Policy Association Medal in 2012, the Ellis Island Medal of Honor and the Business Council for International Understanding’s Global Leadership Award in 2019, and the Distinguished Friends of Singapore Public Service Star in 2021.

The selection process

The executive directors followed the selection process agreed by shareholders in 2011. The process included an open, merit-based, and transparent nomination where any national of the bank’s membership could be proposed by any executive director or governor through an executive director. This was then followed by thorough due diligence and a comprehensive interview of Banga by the executive directors.

World Bank

• On July 1, 1944, as the battles of the Second World War raged in Europe and the Pacific, delegates from 44 countries met in Bretton Woods, New Hampshire to participate in what became known as the Bretton Woods Conference. 

• Their purpose was to agree on a system of economic order and international cooperation that would help countries recover from the devastation of the War and foster long-term global growth. 

• At its conclusion, the conference attendees produced the Articles of Agreement for the International Bank for Reconstruction and Development (soon called the World Bank) and the International Monetary Fund (IMF).

• The World Bank is like a cooperative, made up of 189 member countries. These member countries, or shareholders, are represented by a Board of Governors, who are the ultimate policymakers at the World Bank. 

• Generally, the governors are member countries’ ministers of finance or ministers of development. They meet once a year at the Annual Meetings of the Boards of Governors of the World Bank Group and the IMF.

• The World Bank Group is a unique global partnership with five institutions working for sustainable solutions that reduce poverty and build shared prosperity in developing countries.

Five institutions:

i) The International Bank for Reconstruction and Development: IBRD is a global development cooperative owned by 189 member countries. As the largest development bank in the world, it supports the World Bank Group’s mission by providing loans, guarantees, risk management products, and advisory services to middle-income and creditworthy low-income countries, as well as by coordinating responses to regional and global challenges. 

ii) The International Development Association: IDA helps the world’s poorest countries. Established in 1960, IDA aims to reduce poverty by providing zero to low-interest loans (called “credits”) and grants for programs that boost economic growth, reduce inequalities, and improve people’s living conditions.

Together, IBRD and IDA make up the World Bank.

iii) International Finance Corporation: Established in 1956, IFC is the largest global development institution focused exclusively on the private sector. It helps developing countries achieve sustainable growth by financing investment, mobilising capital in international financial markets, and providing advisory services to businesses and governments. Although part of the Bank Group, IFC is a separate legal entity with separate Articles of Agreement, share capital, financial structure, management, and staff.

iv) Multilateral Investment Guarantee Agency: MIGA was created in 1988 to promote foreign direct investment into developing countries to support economic growth, reduce poverty, and improve people’s lives. MIGA fulfills this mandate by offering political risk insurance (guarantees) to investors and lenders.

v) International Centre for Settlement of Investment Disputes: ICSID provides international facilities for conciliation and arbitration of investment disputes.

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