Bangladesh signs $4.5 billion third line of credit (LoC) agreement with India for its infrastructure and social sector development

Bangladesh has signed $4.5 billion third line of credit (LoC) agreement with India for its infrastructure and social sector development on October 4, 2017. The new Indian line of credit 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 pay an interest rate of 1 % a year. It will have 20 years to pay back the loans, with a grace period of five years. Under the agreement, Bangladesh would have to purchase 65 to 75% of the services, goods or works from the Indian market with the money to be provided under the third LoC following the precedence of the previous two nearly identical agreements.
Bangladesh has two other LoCs open with India: the first one was signed in 2010, and the second one in 2016. These LOCs are collectively worth Tk3.06 billion, but till last year, Bangladesh government has been able to use only USD 576 million.

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