In the newest development which augurs well for the country’s infrastructure sector, the World Bank has extended $4.3 billion loans to four infrastructure projects including $2 billion for recapitalization of public sector banks. The loans would bolster infrastructure investments like strengthening power transmission networks to meet the growing demand, WB said in a statement.

Giving blow by blow details of the loans approved by world’s financial body, the statement said that this include $ 2 billion to enhance banks capital, $1.2 billion to infrastructure financing company IIFCL, $1 billion to help address power deficiency and $150 million to improve water supply in Andhra Pradesh. The bank said that the loans have no conditions attached and would be disbursed in single tranche after January 1, 2010, unless the Indian government prefers it on installments.

In addition to this, it added that there is a second development policy loan that would be considered by the World Bank in the next six to seven months and this too, would be disbursed in single tranche. The sanctioned loans will help maintain credit growth and continued infrastructure investments. Supporting infrastructure is particularly important during the current crisis, not just to sustain the domestic economy at a time of reduced global demand, but even more to lay the foundations for stronger future growth. The laid down conditions of the sanctioned loans are not different from those applicable to other countries. The loan will help PSU banks to expand credit to infrastructure projects, small and medium entrepreneurs and the rural economy.

The statement quoting the World Bank Director for India, Roberto Zagha said that the loan to PowerGrid Corporation, Indian Infrastructure Financial Corporation Limited (IIFCL) and Banking amounting to $4.195 billion is to be repaid with interest, while the loan to the rural water supply project needs to be repaid only with a small processing fee and all these are long-term loans with tenures ranging from 28 years to 35 years with a grace period from 5 to 10 years.