Multilateral Development Banks (MDBs)

GS-3 Mains : Economy

Revision Notes 

Questions : Discuss the significance of reforming Multilateral Development Banks (MDBs)


  • IMF and World Bank pushing for MDB reform to address modern challenges.

About MDBs:

  • Provide financial and technical assistance to developing countries.
  • Promote economic growth, especially in low and middle-income countries.

India and MDBs:

  • India has a significant relationship with MDBs that has evolved over time.
  • Actively engages with MDBs for:
    • Addressing development needs.
    • Contributing to global economic stability.
  • Receives financial and technical assistance for:
    • Infrastructure development.
    • Poverty reduction.
    • Climate change mitigation.



Need for Reform

  • Current MDB framework (established post-WWII) is outdated for 21st-century challenges.
  • Doesn’t reflect the needs and aspirations of developing countries, especially the Global South.
  • MDBs face challenges:
    • Need for better coordination among MDBs.
    • Rising demand for resources.
    • Evolving operational strategies and business models.

Reform Agenda

  • Efforts by MDBs to modernize:
    • Vision
    • Incentive structures
    • Operational approaches
    • Financial capacities
  • Goal: Equip MDBs for 21st-century challenges and development needs of low/middle-income countries.
  • Key element: Enhanced coordination among MDBs (complex global challenges require resources beyond any single MDB).

India’s G20 Presidency and MDB Reforms

  • Reform pressure from shareholders (UN, G7, G20).
  • G20’s Independent Expert Group (IEG) proposed a “Triple Agenda” for MDBs:
    • Address global challenges alongside core mission (poverty reduction, shared prosperity).
    • Triple sustainable lending by 2030.
    • Enhance financial strength (capital adequacy improvements, general capital increases).
  • India emphasized MDB reforms during its 2023 G20 presidency.
  • Highlighted strengthening MDBs to address shared challenges (climate change, sustainable development).
  • Established an Expert Group on “Strengthening Multilateral Development Banks (MDBs)”.

MDBs and India’s Development Goals

  • India leverages MDB resources and expertise for development goals:
    • Infrastructure development
    • Poverty reduction
    • Climate change mitigation
  • Seeks MDBs’ roadmap for becoming a developed nation by 2047.
  • Requests project implementation expertise from MDBs.


  • India’s relationship with MDBs is a strategic partnership for development and global economic stability.
  • MDB reform is complex and requires effort from all stakeholders (MDBs, shareholders, international community).
  • Effective reforms can make MDBs more responsive institutions for 21st-century development challenges.

Leave a Reply

Your email address will not be published. Required fields are marked *