Bangladesh on 4 October 2017 signed a massive USD 4.5 billion third line of credit (LoC) agreement with India for its social sector development and infrastructure with Finance Minister Arun Jaitley vowing to back the country’s developmental initiatives.
The accord was signed in the presence of India’s Finance Minister Jaitley and his Bangladeshi counterpart A M A Muhith after the two leaders held talks.
The USD 4.5bn LoC was announced during Prime Minister Sheikh Hasinas visit to India in April.
India’s view to this agreement was in the backdrop of Bangladesh’s significant development on the socio-economic front in the past seven years. India also emphasized on the point that India always stood by Bangladesh’s attempts to develop and it will continue to do so in the future. This significant agreement is a extension of that effort.
Recognising the India’s effort, Bangladesh also said that “Bangladesh and India have excellent relations at the moment”. They further said that India stood by us during our independence. We hope they will continue to do so in the future.
Line of Credit for Infrastructure:
The new Indian line of credit, worth USD 4.5 billion, will be utilised to finance 17 major projects in Bangladesh, which include roads, electricity, railroads, shipping and ports.
Bangladesh will pay an interest rate of 1% per year. It will have 20 years to pay back the loans, with a grace period of 5-years.
Bangladesh would have to procure 65 to 75% of the services, goods or works from the Indian market with the money to be provided under the third LoC under this contract.
Bangladesh has two other LoCs open with India: First was signed in 2010, and the second was in 2016.