The government signed an agreement with Indian EXIM Bank on Wednesday to receive US$2 billion Indian Line of Credit (LoC) for 14 development projects in the country's various sectors.
Some 14 social and infrastructure development projects in power, railways, road, transportation, information and communication technology, shipping, health and technical education sectors have been identified for implementation under the second Indian LoC.
Economic Relations Division (ERD) Senior Secretary Mohammad Mejbahuddin and Chairman and Managing Director of EXIM Bank of India Yaduvendra Mathur signed the credit deal on behalf of their respective sides at the NEC-2 conference room.
Principal Secretary Md Abul Kalam Azad, Foreign Secretary Md Shahidul Haque, Indian High Commissioner in Dhaka Harsh Vardhan Shringla and other high officials from Bangladesh and India were present on the occasion.
Replying to a question, ERD Senior Secretary Mohammad Mejbahuddin said 75 per cent of goods will be procured from India for the projects under the LoC and rest 25 per cent might be provided from local sources.
He also said only Indian firms can participate in tender process to implement infrastructure and development projects.
The $2.0 billion credit carries 1.0 per cent interest rate and 0.5 per cent commitment fee. The repayment period will be 20 years with a grace period of five years.
If Bangladesh fails to utilise the credit within the stipulated time, it will have to pay an additional 2.0 per cent penalty interest.
The projects in the rail sector include upgrading of the Khulna-Darshana and Parbatipur-Kaunia rail tracks, and setting up of a new workshop at Syedpur Railway Station.
Trucks and double-decker buses for the Bangladesh Road Transport Corporation and advanced equipment for the Roads and Highways Department will be procured with the loan amount.
Besides, four medical colleges, a national burns institute and 12 hi-tech parks will be constructed with the Indian credit.
Speaking at the signing programme, EXIM Bank India MD Yaduvendra Mathur said this is biggest single line of credit ever in the history of the Indian government. This is an indication of the very high importance of bilateral friendly cooperation of the two governments in building infrastructural projects.
He said the agreement will pave the way for deeper economic relations among our country and the EXIM Bank and other development partners in Bangladesh.
Mr Mathur said Bangladesh used successfully US$862 million from the first line of credit in many infrastructure projects including railway, road, transport and laboratory development.
"In addition to the LoC, India is extending buyer's credit of US$1.6 billion to Bangladesh-India Friendship Power Company," he said. .
Indian High Commissioner to Dhaka Harsh Vardhan Shringla expressed the hope that the implementation of the second line of credit would be much faster than that of the first LoC. Both the sides have experienced from the first LoC how to handle the projects.
He also the second LoC is the softest ever credit line India has offered to any country in its history.
"EXIM Bank of India is going to open its representative office here in Bangladesh which will not only help oversee the projects but also open up a new horizon of Indian investments in Bangladesh," he also said.
Foreign Secretary Md Shahidul Haque said the two country's bilateral relationship has not only matured in political sphere but also in development areas.
Principal Secretary Md Abul Kalam Azad said the relationship both in cooperation and development has been progressing equally since 2009.
The first Line of Credit of US$ 1.0 billion was extended by India to Bangladesh in 2010.
Of this, US $200 million was subsequently converted into grant assistance and the line of credit was enhanced from US$ 800 million to $ 862 million in 2015 through an amendatory agreement.
All the 15 projects under the first LOC have received financial concurrence of the EXIM Bank of India. Seven of the total 15 projects have been completed and the rest are at various stages of implementation, according to a press statement of the Indian High Commission.