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Bangladesh, India sign $2 billion new line of credit

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Staff writer ▼ | March 10, 2016
Bangladesh and India have signed a new $2 billion credit agreement to implement socio-economic development projects in Bangladesh and strengthen bilateral relations.
Bangladesh India
Asia   To implement socio-economic development projects
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 per cent 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 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.