India to extend $2-bn credit line to Bangladesh

India will extend a $2-billion line of credit (LoC) to Bangladesh, the largest ever to any country, the government said on Thursday.

This will be in addition to the $1-billion LoC extended to the neighbouring country in 2010.

"The credit line agreement for $2 billion was signed in Dhaka on March 9, 2016, by the chairman and managing director of Exim Bank of India and the secretary, economic relations department of the ministry of finance, Bangladesh," external affairs ministry spokesman Vikas Swarup said at a media briefing here.

The decision to extend this fresh tranche of LoC was taken during Prime Minister Narendra Modi's visit to Dhaka in June 2015.

Swarup said the signing of the agreement paved the way for initiation of projects in various identified sectors.

"Apart from infrastructural projects, there is a special focus on social sector cooperation pertaining to health, which involved establishment of medical colleges and hospitals, education, under which there will be modernisation of two teacher training institutes and vocational training involving modernisation of 49 polytechnic institutes," he said.

He said this would further integrate the economies of India and Bangladesh and "strengthen our practical cooperation in these fields".

"This LoC is the biggest credit line India has ever extended to any country," he added.