Bangladesh, India sign $2 billion new line of credit

Bangladesh and India have signed a new $2 billion credit agreement to implement socio-economic development projects in Bangladesh and strengthen bilateral relations.

Senior Correspondentbdnews24.com
Published : 9 March 2016, 12:36 PM
Updated : 9 March 2016, 01:49 PM

This is the biggest line of credit India has extended to any country so far.

Prime Minister Narendra Modi had promised the assistance during his Bangladesh visit last year.

The interest rate has been fixed at 1 percent annually with a 20-year repayment term, including a five-year moratorium.

Besides infrastructural projects, the agreement stresses cooperation in social sectors such as health and education, involving the establishment of medical colleges and hospitals, the modernisation of two teachers’ training institutes, and the upgrading of 49 polytechnic institutes for better vocational training.

Chairman and Managing Director of EXIM Bank of India Yaduvendra Mathur, and Economic Relations Department (ERD) Secretary Mohammad Mejbahuddin signed the agreement on Wednesday at the ERD auditorium in Dhaka.

The two sides expect the agreement to bring the economies of the two countries closer and strengthen “our practical cooperation” in different sectors.

The Indian High Commission said the government of India was committed “to speedy approvals of project proposals under the LOC”.

India first extended a Line of Credit of $1 billion to Bangladesh in 2010.

Of this, $200 million was later converted into grant and the line of credit was enhanced from $800 million to 862 million in 2015 by means of an amendment to the agreement.

All the 15 projects under the First LOC have been cleared by India’s EXIM Bank.

Seven of the total 15 projects have been completed, while work was on in the rest, the High Commission said.

The Second Line of Credit will fund social and infrastructure development projects in the power, railways, road, transport, information and communication technology, shipping, health and technical education sectors.

Principal Secretary Abul Kalam Azad, Foreign Secretary Md Shahidul Haque and Indian High Commissioner Harsh Vardhan Shringla witnessed the signing.

EXIM Bank Chairman Mathur said this “record” line of credit would take Dhaka-Delhi relations “to a new height”.

He said this was the “highest” loan India had extended to any country. “We believe Bangladesh will use this successfully."

ERD Secretary Mejbahuddin said 14 projects including health, education and communication had been identified for this credit line.

Replying to a question, he said, companies for implementing those projects would be selected through open tender.

Under the agreement, 75 percent of the project materials must be bought from India.

Construction of a double railway line and including signalling systems in the Khulna-Darshana section, development of the Ashuganj river port-Dharkhar-Akhaura land port road, Barapukuria-Bogra-Kaliakoir 400KV electricity line, and establishment of IT/Hi-tech Park at the district level are some of the major projects.