Dhaka, Bangladesh (BBN)– Bangladesh government has signed an agreement with Indian EXIM Bank to receive US$2 billion Indian Line of Credit (LoC) for 14 development projects.
Economic Relations Division (ERD) Senior Secretary Mohammad Mejbahuddin and Chairman and Managing Director of EXIM Bank of India Yaduvendra Mathur signed the credit deal on behalf of their respective sides at the NEC-2 conference room in the capital Dhaka on Wednesday.
Some 14 social and infrastructure development projects in power, railways, road, transportation, information and communication technology, shipping, health and technical education sectors have been identified for implementation under the second Indian LoC.
Principal Secretary Md Abul Kalam Azad, Foreign Secretary Md Shahidul Haque, Indian High Commissioner in Dhaka Harsh Vardhan Shringla and other high officials from Bangladesh and India were present on the occasion.
“This is biggest single line of credit ever in the history of the Indian government. This is an indication of the very high importance of bilateral friendly cooperation of the two governments in building infrastructural projects,” EXIM Bank India MD Yaduvendra Mathur said while speaking at the signing programme.
He also said Bangladesh used successfully $862 million from the first line of credit in many infrastructure projects including railway, road, transport and laboratory development. “In addition to the LoC, India is extending buyer’s credit of US$1.6 billion to Bangladesh-India Friendship Power Company.”
Indian High Commissioner to Dhaka Harsh Vardhan Shringla expressed the hope that the implementation of the second line of credit would be much faster than that of the first LoC.
The second LoC is the softest ever credit line India has offered to any country in its history, he explained.
The $2.0 billion credit carries 1.0 per cent interest rate and 0.5 per cent commitment fee. The repayment period will be 20 years with a grace period of five years.
If Bangladesh fails to utilise the credit within the stipulated time, it will have to pay an additional 2.0 per cent penalty interest.
The projects in the rail sector include upgrading of the Khulna-Darshana and Parbatipur-Kaunia rail tracks, and setting up of a new workshop at Syedpur Railway Station.
Trucks and double-decker buses for the Bangladesh Road Transport Corporation and advanced equipment for the Roads and Highways Department will be procured with the loan amount.
Besides, four medical colleges, a national burns institute and 12 hi-tech parks will be constructed with the Indian credit.
“This is expected to further integrate the economies of both the two countries and strengthen our practical cooperation in these spheres. Government of India is committed to speedy approvals of project proposals under the LoC,” Indian High Commission said in an announcement.