India likely to charge one percent interest on Line of credit extended to Nepal

The Indian Government has said that the interest rate on the one billion dollar line of credit extended to Nepal during Prime Minister Narendra Modi's recent visit to Nepal, is likely to be just one percent.

The previous line of credit, which started in 2006 and is worth 350 million dollars, the interest rate is 1.75 percent. The amount is being utilised in various infrastructure projects, including roads and transmission lines.

Nepal-based web site Kantipur Online quoted Indian Embassy spokesperson Abhay Kumar as confirming that the interest on the soft loan would be one percent.

Meanwhile, other terms and conditions for the loan are yet to be finalised. In the previous line of credit, India offered a repayment period of 20 years, and an additional 20-year grace period in the event of Nepal's failure to repay on time.

Other conditions include 50 percent of the goods and goods paid for with the money should be Indian. Also applicable were 0.5 percent commitment fee and 0.25 percent service charge.

On Wednesday, Indian Ambassador to Nepal Ranjit Rae met Finance Minister Ram Sharan Mahat and discussed the implementation of the development assistance.

The Indian ambassador reportedly asked Nepal to identify projects as soon as possible so that the pledged amount could be utilised at the earliest.

Finance Minister Mahat named a few projects such as Budhigandaki and Nalsinggadh hydropower projects, Kathmandu -Terai Fast Track and Mid-Hill Highway as his government's priority, according to a statement issued by his ministry.

During the meeting, plans for constructing a cricket academy, and cricket grounds in Pokhara, Bhairahawa and Nepalgunj as well as bridges in Jhulaghat were also discussed, the ministry statement said.

They also held discussions on the signing of Power Trade Agreement (PTA) and Power Development Agreement (PDA).