In the largest-ever loan it has given to any foreign country, India has signed an agreement with Bangladesh to extend a USD 1 billion credit line to Dhaka for developing 14 infrastructure projects, mostly in the communications sector.

The loan agreement was signed between the Exim Bank of India and the Economic Relations Department of Bangladesh in the presence of visiting Finance Minister Pranab Mukherjee, who is the first high-profile Indian leader to visit Bangladesh after Prime Minister Sheikh Hasina’s trip to New Delhi in January.

Under the deal, India would lend the amount, the biggest it has offered to any foreign country, at a 1.75 per cent interest rate with a repayment period of 20 years, including a grace period of five years.

Bangladesh officials said the loan amount was the largest the country has received under a single deal.

The line of credit will be used by Bangladesh for developing its railway and other communication infrastructure, besides power grid connectivity between Bangladesh and India and establishment of state-run standards and testing institute facilities.

The deal was inked in pursuance of the agreement reached between Indian Prime Minister Manmohan Singh and Hasina during her visit to New Delhi earlier in the year.

Economic Relations Department (ERD) Secretary M Musharraf Hossain Bhuiyan and Exim Bank of India Chairman and Managing Director T C A Ranganathan signed the deal in the presence of Mukherjee and his Bangladeshi counterpart, Abul Maal Abdul Muhith, at the state guest house of Jamuna.

Bangladesh rolled out the red carpet, usually reserved for heads of states or governments, when Mukherjee arrived on a scheduled four-hour visit, which was later extended by one more hour.

A special Indian aircraft carried the influential leader of India’s ruling Congress-led government. His Bangladeshi counterpart, Abul Maal Abdul Muhith, received him on the VVIP tarmac of the airport.

Referring to the close bonds of friendship between the two countries based on common heritage, historic, linguistic and cultural ties, Mukherjee said soon after arrival, “We need to continue to build on these commonalities and promote the well-being of our people to greater economic engagements.”

Mukherjee for boosting Indo-Bangla anti-terrorism cooperation

Pranab Mukherjee underlined the need for India and Bangladesh to deepen counter-terrorism cooperation, warning that insurgents have the “potential” to affect the bilateral ties.

Addressing press in Dhaka on Saturday Mukherjee said, “We deeply appreciate the efforts of the government of Bangladesh to tackle this menace and we will continue to be closely engaged for enhanced bilateral security cooperation.”

Mukherjee identified “security cooperation” to be an area that engaged the attention of both the countries “given our common desire to root out the forces of extremism and terrorism from our midst”.

“Insurgents and insurgent groups have the potential to affect our relations,” warned Mukherjee.