India extends $4.5-bn third line of credit to Bangladesh

Bangladesh today signed a $ 4.5-bn line of credit (LoC) agreement with India for its infrastructure and social sector development. This is the third line of credit India is expending to Bangladesh.

Managing director of the Export-Import Bank of India (Exim) David Rasquinha signed the agreement for India while Economic Relations Division secretary Kazi Shofiqul Azam signed the deal on behalf of Bangladesh.

The new Indian line of credit, worth $4.5 billion, will be used to fund 17 major projects in Bangladesh, which include electricity, railroads, roads, shipping and ports.

Present at the signing of the agreement were finance minister Arun Jaitley and his Bangladeshi counterpart A M A Muhith.

"Signed joint interpretive note with Bangladesh today to update Bilateral Investment Promotion Agreement to our new investment framework", Jaitley said. "We have extended three Lines of Credit worth $8 billion to Bangladesh in recent years," he added.

"Bangladesh and India have excellent relations at the moment". The loan, which has to be repaid in 20 years, bears a 1 per cent annual interest with a 5-year grace period,'' Bangladesh finance minister Muhith said.

"This significant agreement is a continuation of that effort", Jaitley said.

China, Bangladesh's biggest trade partner followed by India, had pledged a year ago around $24 billion in loans for the South Asian nation, which is one of the world's poorest.

The $4.5 billion agreement between New Delhi and Dacca was announced during the visit of Bangladesh's Prime Minister Sheikh Hasina to India in April this year. Earlier in the day, Bangladesh signed two LoCs with India, collectively worth 3.06 bn Bangladeshi taka.

It was signed between Bangladesh's Economic Relations Division (ERD) and India's Export-Import Bank of India (Exim Bank) at the finance ministry office in Dhaka in the morning yesterday.