India 'relaxes' loan conditions for Bangladesh, Finance Minister Muhith says

The Indian government has relaxed loan conditions for Bangladesh, Finance Minister AMA Muhith has said.

Earlier, Bangladesh had to purchase from India with 75 percent of the credit, but now the amount has been cut to 65 percent, which means Bangladesh can use 35 percent of the credit of its own choice.

In the first phase of the line of credit from India, Bangladesh received $1 billion with 1.7 percent interest.

India cut the rate to 1 percent in the second phase when it gave Bangladesh $2 billion during Prime Minister Narendra Modi's Dhaka visit in 2015.

The rate remained same when the two countries signed $4.5 billion credit deals during Prime Minister Sheikh Hasina's recent visit to New Delhi.

Muhith spoke about the matter after meeting his Indian counterpart Arun Jaitley on the sidelines of the Spring Meeting of the World Bank Group - IMF.

He said Jaitley expressed satisfaction over Hasina's visit to India.

Muhith quoted Jaitley as saying, "The relation between the two countries is very good now. Only one issue has remained unsettled - the water-sharing of the Teesta river. Our prime minister (Modi) has said it would also be resolved. And I am also saying it will be resolved soon."

An agreement on Teesta was not expected during the current visit by PM Hasina, but officials in the Modi government are working closely with West Bengal officials to find common ground to get Chief Minister Mamata Banerjee to agree to the deal that was first worked out during former PM Manmohan Singh's visit to Dhaka.

During Hasina's visit, Modi promised an 'early solution' to the issue.

Economic Relations Divisions Secretary Shofiqul Azam, who was also present in Muhith's meeting with Jaitley, said eight of the projects taken with the first phase of Indian line of credit had been completed.

The remaining seven are in their final stages, he said.

He said the 14 projects that were initiated with the second phase of Indian credit of $2 billion are under way.

The latest Indian credit of $4.5 billion will be used in 17 projects, he added.

The finance minister said the total of $7.5 billion Indian credit would play a 'major' role in Bangladesh's development.