India today signed agreements with the World Bank under which the latter will provide loans totalling $4.2 billion for projects in the infrastructure, banking and power sectors.
The agreements were signed by the representatives of the government, India Infrastructure Finance Co Ltd, Power Grid Corporation and the World Bank.
The World Bank will provide total funding to the tune of $1.2 billion to IIFCL. Of this, $1.195 billion will come as long-term IBRD loan to finance infrastructure projects while $5 million will come as grant for capacity building of IIFCL.
The amount is expected to be disbursed by September 2015. IBRD loan is a variable spread loan based on six-monthly LIBOR. It will have a duration of 28 years and a grace of 7.5 years.
IBRD will also provide $2 billion as banking sector support loan, which is part of the series of measures to contain the slowdown and stimulate the economy by assisting public sector banks to keep credit flowing.
Keeping the growth momentum will help contain the adverse effects of the slowdown on employment and poverty, broaden financial inclusion and help production and trade sectors.