World Bank loans for three projects
Loan Agreements for three projects amounting to US$ 4.2 billion equivalent have been signed by the representatives from the Government of India, India Infrastructure Finance Co. Ltd (IIFCL), Power Grid Corporation and the World Bank. This includes a finance of US$ 1.2 billion for IIFCL.
The financing for IIFCL has two components:
1. IBRD Loan of $1.195 billion long-term finance to infrastructure projects; and
2. Grant of $ 5 million for capacity building of IIFCL.
The amount is expected to disburse by September 2015. IBRD loan is a variable spread loan based on six monthly LIBOR. It is loan for duration of 28 years with a grace of 7.5 years. This loan from the World Bank will further help bolster the country’s achievements in infrastructure area and lay the foundations for stronger growth in the future by making long term financing available to infrastructure projects being done through Public Private Partnerships (PPPs). These PPPs are expected to be in a range of sectors including roads, power, airports, and ports.
The World Bank loan agreement also covers the Fifth Power System Development Project. The total cost of the Fifth Power System Development Project is US $ 1.562 billion out of which US$ 1 billion will be financed by the World Bank. The objective of the project is to strengthen the transmission system in order to increase reliable power exchange between the regions and States of India. The project is expected to be completed by June 30, 2015.
THe World Bank is also giving Support Loan of US$2 billion to the India Banking Sector. The Banking Sector Support Loan, an IBRD loan for $2 billion, is part of the series of measures to stimulate the economy by assisting Public Sector Banks in maintaining credit growth to contain the adverse effects of the slow down on employment and poverty, broaden financial inclusion and help production and trade sectors.