Bangladesh today signed a USD 4.5 billion third line of credit (LoC) agreement with India for its infrastructure and social sector expansion.

The agreement was signed in the presence of Union Finance Minister Arun Jaitley and his Bangladeshi counterpart A.M.A Muhith after the two leaders held talks here.

Economic Relations Division Secretary Kazi Shofiqul Azam signed the agreement on behalf of Bangladesh while Managing Director of the Export-Import Bank of India (Exim) David Rasquinha signed for India.

The new Indian line of credit, worth an astounding USD 4.5 billion, will be used to fund 17 major projects in Bangladesh, which include electricity, railroads, roads, shipping and ports.

As with previous LoC agreements, Bangladesh will give an interest rate of 1 per cent a year. It will have 20 years to pay back the loans, with a grace period of five years.

“Bangladesh has developed significantly on the socioeconomic front in the past seven years,” Mr. Jaitley said following the signing of the deal.

“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,” he said.

Speaking on the occasion, Mr. Muhith said, “Bangladesh and India have tremendous relations at the moment.”

“They stood by us during our independence. We hope they will go on with these healthy relations in the future,” Mr. Muhith was quoted as saying by bdnews.

The USD 4.5 bn deal was announced during Prime Minister Sheikh Hasina’s visit to India in April. Mr. Jaitley’s trip to Bangladesh was used to settle the agreement.

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