Bangladesh has signed a $4.5 billion loan deal with India in the third Line of Credit, or LoC, agreement.
As with previous LoC agreements, Bangladesh will pay an interest rate of 1 percent a year. It will have 20 years to pay back the loans, with a grace period of five years.
The agreement was signed in the presence of Indian Finance Minister Arun Jaitley and Bangladesh Finance Minister AMA Muhith at the Ministry of Finance on Wednesday, following a meeting.
Economic Relations Division Secretary Kazi Shofiqul Azam signed the deal on behalf of Bangladesh, while Managing Director of the Export-Import Bank of India (Exim) David Rasquinha signed for India.
Bangladesh has developed significantly on the socioeconomic front in the past seven years, said Jaitley following the signing.
“We have stood by Bangladesh’s attempts to develop and we will do so in the future. This significant agreement is a continuation of that effort.”
“Bangladesh and India have excellent relations at the moment,” said Muhith. “They stood by us during our independence. We hope they will continue to do so in the future.”
The $4.5bn deal had been announced during Prime Minister Sheikh Hasina’s visit to India in April. The Indian finance minister’s trip to Bangladesh was used to finalise the agreement.
In 2010 India extended its first LoC to Bangladesh with a $1 billion loan agreement. Twelve of the 16 infrastructure projects covered in that deal have been completed, officials say.
The second LoC, amounting to $2 billion, was issued in 2016. The projects covered under that agreement are in various stages of development.