India extends $2 billion credit line to Bangladesh

India's Prime Minister Narendra Modi (L) and his Bangladeshi counterpart Sheikh Hasina clap during signing ceremony of agreements between India and Bangladesh in Dhaka June 6, 2015. REUTERS/Rafiqur Rahman/Files

DHAKA (Reuters) - India has signed an agreement extending $2 billion in development financing to Bangladesh, the Indian government’s external lending arm said on Thursday, in the agency’s biggest ever credit facility to another country.

The deal, signed on Wednesday in Dhaka, came after Prime Minister Narendra Modi’s announcement of the new credit line to Bangladesh during his Dhaka visit in June last year. It follows India’s $1 billion in assistance provided to Bangladesh in 2011 for infrastructure development.

The credit line would be used to finance development in the power sector, railways, road transportation, information and communication technology, shipping, health and technical education sectors, the Exim Bank said it a statement.

During Modi’s visit, the two countries signed a land boundary agreement, more than four decades after the neighbours first tried to resolve the complex territorial disputes.

Exim Bank is also in the process of extending $1.60 billion in buyer’s credit to an India-Bangladesh joint venture to build a 1,320 megawatt thermal power plant project in Bangladesh.

Reporting by Ruma Paul; Editing by Sam Holmes