India and Bangladesh have signed a new $2 billion credit agreement to implement socio-economic development projects in Bangladesh and strengthen bilateral relations
Flash points
- The interest rate has been fixed at 1 per cent annually with a 20-year repayment term, including a five-year moratorium period
- This is the biggest line of credit India has extended to any country so far
- The agreement supports infrastructural projects, cooperation in social sectors such as health and education, involving the establishment of medical colleges and hospitals, the modernization of two teachers’ training institutes, and the upgrading of 49 polytechnic institutes for better vocational training
- India first extended a Line of Credit of $1 billion to Bangladesh in 2010
- Of this, $200 million was later converted into grant and the line of credit was enhanced from $800 million to $862 million in 2015 by means of an amendment to the agreement
- Seven of the total 15 projects have been completed
- The completed projects include Construction of 2nd Bhairab and 2nd Titas Bridge, Khulna-Mongla port rail line, 3rd and 4th Dual Gauge track between Dhaka-Tongi section and doubling of dual gauge track between Tongi-Joydebpur, rehabilitation of the Kulaura-Shahbajpur section of Bangladesh Railway
- Replacement and modernization of signalling system of three stations between Ashuganj and Akhaura section of Bangladesh Railway
- The Second Line of Credit will fund social and infrastructure development projects in the power, railways, road, transport, information and communication technology, shipping, health and technical education sectors
- The LOC was extended by Export-Import Bank of India (Exim Bank) on behalf of the Government of India
Key points:
- Bangladesh Capital: Dhaka
- Bangladesh Currency : Bangladesh Taka
- Bangladesh PM: Sheikh Hasina
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