Dhaka, March 8 (IANS): Dhaka and New Delhi will sign the final agreement on a $2 billion credit from India on Wednesday.

Bangladesh's Economic Relations Division (ERD) senior secretary Mohammad Mejbahuddin and the Indian Exim Bank chairman and managing director will sign the agreement on behalf of their countries, bdnews24.com quoted ERD additional secretary Asif-uz-Zaman as saying on Tuesday.

Senior officials of the Bangladesh government and Indian diplomats, including the high commissioner, will be present there, according to Asif-uz-Zaman.

A Memorandum of Understanding (MoU) was signed on the fresh soft loan during Prime Minister Narendra Modi's visit to Dhaka in June 2015.

A report on the final agreement has been sent to the prime minister. All the terms and conditions tagged with the fresh credit will be like those for $1 billion India lent Bangladesh in 2010, the report stated.

As many as 15 development projects were undertaken with the previous Line of Credit (LOC) and seven of them have already been completed.

The $2 billion credit carries one percent interest rate and 0.5 percent commitment fee. 

The repayment period will be 20 years with a grace period of five years, according to the report.

If Bangladesh fails to utilise the credit within the stipulated time, it will have to pay an additional two percent penalty interest.