India's Exim Bank keen to open office in Dhaka
India's Exim Bank wants to open a representative office in Bangladesh to run its operations smoothly following significant scaling-up of its lending activities.
The issue is being discussed at a two-day review meeting on India's line of credit or LoC to Bangladesh, which started in New Delhi yesterday.
A team led by Abul Mansur Md Faizullah, additional secretary of the Economic Relations Division or ERD, joined the meeting.
The Indian side mentioned that Exim Bank is eager to open a representative office in Dhaka as the neighbouring country's soft loan commitments to Bangladesh have expanded, according to the review report prepared for the meeting.
Earlier, India had extended LoC to Bangladesh on a small scale, according to the report. For instance, India gave Rs 300 million in 1991; Rs 70 million in 1997; and Rs 2 billion in 1999.
Since 2010, India has started extending LoC in dollars and with a low interest-rate to Bangladesh; that year the neighbouring country rolled out $1 billion. In 2016, it was $2 billion.
Due to complexities in appointing employees to the country office, Exim Bank's proposal is still kept pending, said an ERD official.
In this context, the review report said Exim Bank is constrained by the local employment condition (5:1 ratio) prescribed by the Board of Investment. Subsequently, India's Exim Bank has written to the ERD secretary to settle the matter.
India cited the case of South Korea's Exim Bank, which opened a representative office in Dhaka recently but it did not have any condition of mandatory local employment.
Exim Bank is a development partner that serves as an important link between all the stakeholders and ensures smooth implementation of projects under the LoC, they said.
Subsequently, they requested Bangladesh to take the necessary measures so that Exim Bank can quickly open an office in Dhaka.
At the Delhi meeting, the status of the projects being implemented under the two LoCs will be discussed in detail, according to the ERD official.
Of the $1 billion LoC extended to Bangladesh in 2010, $200 million was converted to grants and released, while the remaining $800 million was given against 15 projects.
The amount was later increased to $862 million; only $325.74 million has so far been disbursed.
Of the 15 projects, eight have been completed, where the amount of Indian loans was $162.63 million, according to the review report.
Seven projects are ongoing, with commercial contracts signed against loans of $644.33 million. The upcoming commercial contracts amount to $215.67 million.
During Prime Minister Narendra Modi's visit to Bangladesh in June last year, India announced another $2 billion loans.
The agreement for the LoC was signed in March 2016, with the loan becoming effective from May.
Primarily, 14 projects have been identified under the latest LoC. Of those, Bangladesh sent final funding confirmation for 11 projects to India.
India confirmed nine of the projects, involving $1.22 billion, while the other two are under consideration.