India firms up $1 billion soft loan for Bangladesh | india | Hindustan Times
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India firms up $1 billion soft loan for Bangladesh

India has offered easy terms for its proposed $1 billion credit to Bangladesh, setting a 1.75 per cent interest rate for the grant for the country's infrastructure development and a repayment time of 25 years.

india Updated: Apr 01, 2010 20:21 IST

India has offered easy terms for its proposed $1 billion credit to Bangladesh, setting a 1.75 per cent interest rate for the grant for the country's infrastructure development and a repayment time of 25 years.

The $1 billion credit was offered by India during Bangladesh Prime Minister Sheikh Hasina's New Delhi visit in January this year.

The Daily Star newspaper said New Delhi last week sent a draft agreement for the credit suggesting 25 years time limit for the repayment including five years of grace period.

Economic Relations Division officials confirmed the report saying they would convene a meeting of the concerned ministries next week to seek their opinions on the draft ahead of conveying Dhaka's consent provided all agreed to the proposal.

The Star report, however, quoting finance ministry officials said the terms and conditions for the credit were as easy as that of the Asian Development Bank while the interest rate of ADB's Ordinary Capital Resources (OCR) stands at London Inter-Bank Offer Rate (LIBOR) plus 0.6 per cent.

Bangladesh had sought the Indian credit assistance particularly for development of its communication infrastructure as the two countries agreed for increased connectivity for boosting bilateral and regional trade.

The ministries concerned have already started preparing projects for utilising the loans. If there is any need for procurements for the projects, the draft agreement provides that those must be purchased from India.

The Economic Relations Division (ERD) has sought opinions of the ministries on the draft agreement. Next week, a meeting on the draft will be held with the ministries.

If the government has no objection to the draft, Dhaka will convey New Delhi its consent to the agreement.

The joint communique issued after Hasina's talks with her Indian counterpart Manmohan Singh announced the $one billion credit for a range of projects including those for railway infrastructure, supply of locomotives and passenger coaches, rehabilitation of a railway workshop, procurement of buses and river dredging.

The two countries signed three agreements on cross border crimes, terrorism and mutual legal assistance and transfer of Sentenced Persons, an MoU on exchange of electricity while under a joint communique Dhaka agreed to offer India the port facilities alongside Nepal ad Bhutan during Hasina's visit.