Dhaka and New Delhi are going to take some fresh measures, including formation of a joint monitoring committee, to quickly implement the projects under India's Line of Credit (LoC).

A meeting between the finance ministers of two countries made the decision before signing of a fresh and the biggest yet Indian LoC worth $4.5 billion on Wednesday.

A Bangladesh finance ministry official said the monitoring committee members would include representatives from Bangladesh's Economic Relations Division, ministries concerned and India's Exim Bank.

Officials from the Indian High Commission and other ministries of Bangladesh may also be included in it.

Apart from looking after the implementation of the projects, the official said, the committee would also identify and recommend necessary actions if any complaints or allegation arises against the line ministry or the bidder.

Only Indian bidders can participate in projects implemented under Indian dollar credit and from now on, Exim Bank would send a list of 10 to 12 Indian bidders to Bangladesh and the competitive bidding will take place among them.

A list of relevant companies under various grades is already now with the Indian bank and India would send the list of qualified bidders to Bangladesh, said the official.

These moves are expected to speed up utilisation of Indian LoC as the previous record of Indian credit use in Bangladeshi development projects was poor.

Bangladesh has so far utilised $576 million against $3b Indian credit under two previous LoC committed over the past seven years.

Indian Finance Minister Arun Jaitley arrived in Dhaka on Tuesday and left for New Delhi yesterday morning.

During his visit, the third Indian LoC was signed. So far, India has committed $7.5 billion to Bangladesh in the three phases since 2010.

Bangladesh Finance Minister AMA Muhith raised the issue with his Indian counterpart and said the commitment was increasing but disbursement was not going up accordingly.

He urged India to take some measures for increasing implementation of the projects.

The finance ministry official said Arun Jaitley told them that they would take steps so that there was no delay in any approval process and the Exim Bank office in Dhaka would expedite project approval and the monitoring process.

Under the third LoC, 17 projects have already been identified. The meeting on Wednesday decided that India would soon send a high level representative from Exim Bank. The representative would evaluate the overall conditions of every project.

On the basis of the official's observations, Exim Bank would quickly approve relevant proposals.

As per Indian rules after signing of the loan agreement Exim Bank would approve each project separately with the DPP (development project proposal).

Following the approval, Bangladesh would have the project approved by Executive Committee of National Economic Council (Ecnec). Later, preparations would be taken for preparing tender documents and the project implementation. Exim Bank's approval is required for preparing the papers.

The finance ministry official said they would hold a meeting with the ministries, which are involved with the implementation of the 17 projects, at the end of this month.

The meeting would review the project approval process by the Ecnec and other issues so that the implementation of the projects begins quickly.

The rate of interest on Indian loan is 1 percent and 0.5 percent is the commitment charge.

Bangladesh in the meeting with Jaitley proposed waiver of the commitment charge. It also urged the Indian finance minister to turn a part of the credit into grant. India, however, did not make any specific assurance in this regard.

The first LoC of $1 billion was signed on August 7, 2010 and the second LoC of $2 billion in March last year.

At Wednesday's signing ceremony, Muhith said, “The progress on the implementation of the projects under the first and second credits has not been too good. But initial teething troubles are now over. We believe that implementation of this agreement would be pretty fast. Let's hope that it will be fast.”

The Indian minister pointed out that there was some delay in the past, as it took time to select the projects. But this time, 17 projects have been identified in advance.

“One of the reasons for delays for some of these projects in any country is also land acquisition. There are local issues which all governments face because they have to do it in a very tactful manner.”

Jaitley further said, “We do hope the earlier credit also gets executed expeditiously.”