Bangladesh has signed an agreement with India on the new US$2 billion Line of Credit (LoC) to implement 14 development projects.
This is the second credit agreement with neighbouring India after first deal in August 2010, when India agreed to lend $1 billion to support Bangladesh’s development work.
Economic Relations Division (ERD) Senior Secretary Mohammad Mejbahuddin and Chairman and Managing Director of EXIM Bank of India Yaduvendra Mathur signed the agreement on their respective behalves at the NEC-2 conference room in the city yesterday.
India offered the new LoC at 1% interest rate and 0.5% commitment fee (on undisbursed amount) during Indian Prime Minister Narendra Modi’s two-day state visit to Bangladesh in the first week of June last year. The loan will have to be repaid in 20 years with a five-year grace period.
Addressing the agreement signing ceremony, Principal Secretary of Prime Minister’s Office Abul Kalam Azad said: “Prime Minister Sheikh Hasina directed the ERD to send the project plan details under new LoC to India for speedy implementation of the projects.”
Regarding the conditions from Indian side, Mejbahuddin stated that the quantity of material procured from India reduced from 75% to 65%. Further reductions may be considered on a case-by-case basis, provided that they are not sourced from a third country.
The ministries concern will have to pay Custom Duty (CD) and VAT to implement the projects under Indian LoC, he added.
High Commissioner of India Harsh Vardhan Shringla said: “Various social and infrastructure development projects in power, road transportation, information and communication technology, shipping, health and technical education sectors have been identified for the implementation under the second LoC.
He said the $2 billion LoC is the biggest credit line India has so far extended to any country.