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India charges Nepal lowest interest rate

Posted on Aug 21 2014 | IANS

By Anil Giri, Kathmandu, Aug 21 : Compared to other South Asian countries, India charges Nepal the lowest interest rate for the lines of credit (LOCs) it offers, a diplomat here said.

"This shows India's close affinity to Nepal with relations getting better and stronger," an Indian diplomat told IANS.

India is charging Nepal one percent interest for the USD 1 billion LOC that was announced during Prime Minister Narendra Modi's visit here earlier this month.

India charged Nepal 1.75 percent interest for the LOCs announced in 2006 and 2011.

Prior to the latest announcement, the Indian LOCs stood at USD 350 million for various infrastructure related projects in Nepal.

The LOCs are provided through the EXIM Bank of India.

The repayment period for the LOCs is 20 years and can be extended by a similar period if Nepal cannot repay on time, The Kathmandu Post reported Thursday.

The latest LOC will be used for infrastructure-related and hydropower projects that Nepal has to identify.

Indian Ambassador Ranjit Rae met Nepali Finance Minister Ram Sharan Mahat Thursday and discussed projects that could be executed under the latest LOC.

Mahat named the Budhigandaki and Nalsinggadh hydropower projects, the Kathmandu-Terai Fast Track Expressway and the Mid-Hill Highway as the government's priorities, a finance ministry statement said.

Mahat and Rae also discussed the construction of a cricket academy, besides cricket grounds in Pokhara, Bhairahawa and Nepalgunj, as well as bridges in Jhulaghat, the statement said.

They also discussed the signing a power trade agreement (PTA) and a power development agreement (PDA).

Rae stressed on holding intensified discussions on contentious issues to reach an agreement as early as possible, the statement added.

(Anil Giri can be contacted at

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