Bangladesh and India signed a 2 billion US dollar Line of Credit (LOC) on 9 March 2016 to implement socio-economic development projects in Bangladesh and strengthen bilateral relations.The LOC was extended by Export-Import Bank of India (Exim Bank) on behalf of the Government of India.

The LOC agreement to this effect was signed in Dhaka, Bangladesh by Yaduvendra Mathur, Chairman & Managing Director, EXIM Bank, and Mohammad Mejbahuddin, Senior Secretary, Economic Relations Division, Ministry of Finance, on behalf of the Government of the People’s Republic of Bangladesh.

The agreement was inked in line with Prime Minister Narendra Modi’s announcement during his visit in Bangladesh in June 2015.

Key highlights of the LOC

• The LOC of 2 billion US dollars is the largest ever GOI-supported LOC extended by Exim Bank to any country.

• With the signing of the LOC, EXIM Bank, till date, has extended two LOCs to Bangladesh, on behalf of Government of India, taking the total value of LOCs to 2.862 billion US dollars.

• India first extended a LOC of 1 billion US dollars to Bangladesh in 2010.

• Of this, 200 million US dollar was later converted into grant and the line of credit was enhanced from 800 million US dollar to 862 million US dollar in 2015 by means of an amendment to the agreement.

• 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.

Projects covered under the first LOC of 862 million US dollars include:

• Procurement of buses, locomotives, passenger coaches and other rolling stock, laboratory equipment.

• 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.

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