Exim Bank provides USD 500 mn credit to Bangladesh for defence procurement


Exim Bank provides USD 500 mn credit to Bangladesh for defence procurementMUMBAI: India has provided USD 500 million (Rs 3,561 crore) line of credit to Bangladesh for defence-related procurement in the neighbouring country.

Export Import Bank of India (Exim Bank) entered into an agreement on April 11 with Bangladesh's Armed Forces Division for making available to the latter a Government of India-supported line of credit (LoC) of USD 500 million, the RBI said in a notification on Friday.

The LoC is for the purpose of financing defence-related procurement in Bangladesh, it said.

Under this soft loan facility, financing of export of eligible goods and services from India would be allowed subject to the Foreign Trade Policy, the Reserve Bank of India (RBI) said.

"Out of the total credit by Exim Bank under the agreement, goods and services including consultancy services of the value of at least 75 per cent of the contract price shall be supplied by the seller from India," it said.

The remaining 25 per cent of goods and services may be procured by the seller for the purpose of the eligible contract from outside India, including Bangladesh.

But, based on the nature of the procurement, the eligible goods and services up to the contract price to be supplied by seller from India may be further reduced from 75 per cent to 65 per cent and further reduction may be considered on a case-to-case basis.

The agreement under the LoC is effective from November 7.

The terminal utilisation period of the loan is 10 years from the date of signing of the agreement, the RBI added further.