India gives $2-bn LOC to B’desh in our biggest foreign credit line

India on Wednesday signed a landmark agreement with Bangladesh extending $2 billion to the country in its biggest ever overseas credit line, five years after it inked a credit agreement worth $1 billion with its neighbour. “The $2 billion LOC (line of credit) is the biggest credit line India has so far extended to any country,” said an Indian High Commission statement here as chairman and managing director of Exim Bank Yaduvendra Mathur signed the deal with senior secretary in Bangladesh’s Economic Relations Division Mohammad Mesbahuddin.

The agreement was inked in line with Prime Minister Narendra Modi’s announcement during his visit here in June, 2015 while Bangladeshi officials familiar with the process said this credit would be used in a wider range of areas including the social sector while the previous 2010 credit line was mostly concentrated on communication infrastructure.

“Bangladesh-India friendship now reached at its peak but we want to set it to a higher trajectory. The signing of the agreement is the manifestation of the friendship,” Prime Minister Sheikh Hasina’s principal secretary Abul Kalam Azad said at the signing ceremony. Bangladesh foreign secretary Shahidul Haque and Indian High Commissioner in Dhaka Harsh Vardhan Shringla, among others, witnessed the ceremony at the National Economic Council complex.

In a media briefing following the signing ceremony Mesbahuddin said that 14 projects so far were planned to be implemented with the second Indian LOC covering power, railways, roads, transportation, information and communication technology, shipping, health and technical education sectors. He said apart from infrastructure projects, a special focus on social sector cooperation pertaining to health and technical education aiming to further integrate economies of both countries and strengthen mutual cooperation.

“All the 15 projects under the First LOC have received financial concurrence of EXIM Bank of India. Seven of the total 15 projects have been completed and the rest are at various stages of implementation,” the Indian High Commission statement said. The Indian envoy said the two countries developed a functional joint mechanism in overseeing the implementation of the projects under the 2010 LOC and expected the arrangement to work for the second LOC as well. The Indian credit line bears an interest rate of 1 per cent to be re-payed in 20 years with a five-year grace period, it said.

Bangladesh’s ERD in a statement said the “soft loan” committed under the second Indian LOC “will play a significant role in the socio-economic development of Bangladesh, which will be congenial for fostering the ongoing development partnership between the two countries”. The first “Dollar Credit Line Agreement” for $1 billion was signed between the two countries in 2010 for developing infrastructure projects, mostly in the communications sector. 

Meanwhile, Prime Minister Narendra Modi will inaugurate by remote control 100 mw power supply from Tripura’s Palatana project to Bangladesh on March 23. The same day Bangladesh Prime Minister Sheikh Hasina would provide 10 GB Internet bandwidth to India, Tripura Power and Communication Minister Manik Dey told reporters here. Dey said there would not be any formal function in the state to mark the occasion as the entire programme would be held through video-conferencing. After the formal opening of international gateway of internet, Tripura will be third state which is having such gateway after Mumbai and Chennai. This will help the entire north eastern states, he said.

Telecom Minister Ravi Shankar Prasad had laid the foundation of the project in Agartala on July 13, 2015 that aims at strengthening telecom services in the north eastern states. Under the project, an international gateway for broadband connectivity will be set up at Agartala in which connectivity will be provided via Bangladesh under a pact  between BSNL and Bangladesh  Submarine Cable Company Ltd.