Economic Relations Division (ERD) and Indian Exim Bank signed a conditional $1 billion credit line in August last year to finance different projects where 85 percent of machine will be procured from India. The minister said 12 railway projects have so far have been endorsed by the government and sent to the Indian authorities.

"We're going to sign a $25.55 million agreement with Exim Bank next week on supplying 165 BG wagons," he said. This will be the first agreement to disburse fund to procure machinery under the Indian Loc, he added. A total of $960 million out of $1 billion LoC is being exhausted, the minister said.

Bangladesh government signed the 'much controversial' credit agreement with the public sector bank of India on Aug 7 last year when Indian finance minister Pranab Mukherjee visited the country. Aug 7, 2010 is the date of execution for the agreement that drew much criticism for the Bangladesh government.

The endorsement of the credit agreement with effect from February 1, 2011 means that the Indian bank makes the money available for Bangladesh and starts charging the interest from that date. The Exim Bank will charge 1.75 per cent interest per annum with a commitment fee of 0.5 per cent on unutilised credit after 12 months from the date of contract approval.

The repayment period is 20 years with grace period of five years, according to the agreement.