The credit from the International Development Association (IDA), the World Bank's concessionary arm, is for a period of 40 years with a 10-year grace period. It carries a 0.75 percent service charge, according to a World Bank press release.

The Bangladesh Railway Reform Programmatic Development Policy Credit is the first of two operations that will help the government in improving the governance structure of Bangladesh Railway.

It is designed to enhance the railway's capability to provide effective service to passengers and businesses, reverse the declining trends and reduce financial losses of the railway.

The project is part of a larger multi-donor development partnership with the government, in which the World Bank along with the Asian Development Bank and Japan Bank for International Cooperation are providing support to transform the railway sector and make it a preferred mode of trans portation in the country.

The project will help the government to increase the railway's operational autonomy, improve its management structure and commercial orientation, modernise the financial management and cost accounting system, and enhance the incentive structure and career development for railway staff.

Weak governance in the railway sector combined with inadequate budget allocation has resulted in a dilapidated railway infrastructure and inefficient rail services.

"Improving governance of Bangladesh Railway will improve the investment climate and contribute to Bangladesh's economic development and poverty reduction efforts," said Christine Wallich, World Bank country director for Bangladesh.

"It will do so by improving the quality of transport services available to businesses and passengers and making Bangladesh's economy more competitive in the region," she added.