India and the World Bank signed an agreement on Tuesday under which an amount of $4.2 billion (around Rs 20,000 crore) would be to support the infrastructure projects of the country, while recapitalising the public sector banks.
PowerGrid and India Infrastructure Finance Company Ltd have signed pacts for $1 billion (Rs 4,640 cr) and $1.2 billion (Rs 5,600 cr), respectively.
An amount of $2 billion would go for recapitalisation of the PSU banks, which require capital infusion during 2009-2011.
The move would help them offer credit while helping in containing the adverse effects of the slowdown. The funding to PowerGrid will be used for Fifth Power System Development Project. The project is aimed at strengthening the transmission system.
The loans for the banking sector and PowerGrid would have a maturity period of 30 years, while that to IIFCL has a 28-year maturity.