Exim Bank extends $1 bn of LoC to Nepal

MUMBAI: Export-Import Bank of India (Exim Bank) today said it has extended a Line of Credit (LOC) worth $1 billion to Nepal for financing hydropower, irrigation and infrastructural development projects.

Under the LOC, the bank will reimburse 100 per cent of contract value to the Indian exporters, upfront upon shipment of goods, the bank said in a release.

The agreement would be used for sourcing of goods and services from the country.

This would be the bank's third LOC agreement with Nepal, taking the total value of LOCs to $1.35 billion.

The first LOC of $100 million was extended to Nepal in September 2007 for financing road, rural electrification, power transmission and hydro power projects.

The second LOC of $250 million was extended in October 2011 for financing infrastructure projects such as highways, airports, bridges, irrigation, roads, railways and hydropower projects in Nepal.

The LOC was signed in Kathmandu, Nepal by Exim Bank deputy managing director David Rasquinha and Nepal's joint secretary (ministry of finance), Madhu Kumar Marasini.

The major items that India exports to Nepal are petroleum products, primary and semi-finished iron and steel, transport equipment, cereals, machinery and instruments, and plastics and articles.