India - Third Ardc Credit Project : Credit 0947 - Credit Agreement - Conformed

CONFORMED COPY CREDIT NUMBER 947 IN Development Credit Agreement (Third ARDC Credit Project) between INDIA and INTERNATIONAL DEVELOPMENT ASSOCIATION Dated August 20, 1979 CREDIT NUMBER 947 IN DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated August 20, 1979, between INDIA, acting by its President (hereinafter called the Borrower) and INTERNATIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Association). WHEREAS (A) the Borrower has requested the Association to assist in the financing of the Project described in Schedule 2 to this Agreement by extending the Credit as hereinafter provided; (B) the Project will be carried out by Agricultural Refi- nance and Development Corporation (hereinafter called ARDC) with the Borrower's assistance and, as part of such assistance, the Borrower will make available to ARDC the proceeds of the Credit as hereinafter provided; (C) the Association has agreed, on the basis, inter alia, of the foregoing, to extend the Credit to the Borrower upon the terms and conditions hereinafter set forth and in the Project Agreement of even date herewith between the Association and ARDC; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I General Conditions; Definitions Section 1.01. The parties to this Agreement accept all the provisions of the General Conditions Applicable to Development Credit Agreements of the Association, dated March 15, 1974, with the same force and effect as if they were fully set forth herein (said General Conditions Applicable to Development Credit Agree- ments of the Association being hereinafter called the General Conditions). Section 1.02. Wherever used in this Agreement, unless the context otherwise requires, the several terms defined in the General Conditions have the respective meanings therein set forth and the following additional terms have the following meanings: (a) "'ARDC" means Agricultural Refinance and Development Corporation, a statutory corporation established and organized under the laws of the Borrower, or any successor thereof; -2- (b) "Project Agreement" means the agreement between the Association and ARDC of even date herewith, as the same may be amended from time to time, and such term includes all schedules to the Project Agreement; (c) "Subsidiary Loan Agreement" means the agreement to be entered into between the Borrower and ARDC pursuant to Section 3.01 (b) of this Agreement, as the same may be amended from time to time, and such term includes all schedules to the Subsidiary Loan Agreement; (d) "LDB" means any State Cooperative Land Development Bank established in accordance with the laws of a State or of the Borrower. Where LDB is a federation of Primary Banks, "LDB" shall include all such Primary Banks; (e) "SCB" means any State Cooperative Bank established in accordance with the laws of a State or of the Borrower; (f) "Commercial Bank" means any Commercial bank operating under the laws of the Borrower; (g) "Participating Bank" means any LDB, SCB or Commercial Bank making loans which are, or are proposed to be, refinanced by ARDC under the Project; (h) "Small Farmer" shall have the meaning assigned to it in Schedule 2 to the Project Agreement, as such Schedule may be amended from time to time by agreement between the Borrower, the Association and ARDC; (i) "Beneficiary" means any person, group of persons, coop- erative society, corporation or other entity which is eligible to receive a loan from a Participating Bank under the Project; such term shall include the term "Small Farmer"; (j) "Scheme" means an agricultural development project approved or to be approved by ARDC; (k) "Rs" means rupees in the currency of the Borrower; (1) "SGO" means any State Groundwater Organization estab- lished in a State or Union Territory of India; -3- (m) "State" means any State in the Borrower's territory; and (n) "State Electricity Board" means any State Electricity Board established in any of the States pursuant to the Electricity (Supply) Act, 1948, as amended, of India. ARTICLE II The Credit Section 2.01. The Association agrees to lend to the Borrower, on the terms and conditions in the Development Credit Agreement set forth or referred to, an amount in various currencies equiva- lent to two hundred and fifty million dollars ($250,000,000). Section 2.02. The amount of the Credit may be withdrawn from the Credit Account in accordance with the provisions of Schedule 1 to this Agreement, as such Schedule"may be amended from time to time by agreement between the Borrower and the Associa- tion, for expenditures made (or, if the Association shall so agree, to be made) in respect of the reasonable cost of goods and services required for the Project and to be financed out of the proceeds of the Credit. Section 2.03. Except as the Association shall otherwise agree, procurement of the goods and civil works to be financed out of the proceeds of the Credit, shall be in accordance with procedures satisfactory to the Association. Section 2.04. The Closing Date shall be June 30, 1982 or such later date as the Association shall establish. The Associa- tion shall promptly notify the Borrower of such later date. Section 2.05. The Borrower shall pay to the Association a service charge at the rate of three-fourths of one per cent (3/4 of 1%) per annum on the principal amount of the Credit withdrawn and outstanding from time to time. Section 2.06. Service charges shall be payable semiannually on February 15 and August 15 in each year. Section 2.07. The Borrower shall repay the principal amount of the Credit in semiannual installments payable on each Feb- ruary 15 and August 15 commencing August 15, 1989, and ending -4- February 15, 2029, each installment to and including the install- ment payable on February 15, 1999, to be one-half of one per cent (1/2 of 1%) of such principal amount, and each installment thereafter to be one and one-half per cent (1-1/2%) of such principal amount. Section 2.08. The currency of the United Kingdom of Great Britain and Northern Ireland is hereby specified for the purposes of Section 4.02 of the General Conditions. ARTICLE III Execution of the Project Section 3.01. (a) Without any limitation or restriction upon any of its other obligations under the Development Credit Agree- ment, the Borrower shall cause ARDC to perform in accordance with the provisions of the Project Agreement and the Subsidiary Loan Agreement all the obligations therein set forth, shall take and cause to be taken all action, including the provision of funds, facilities, services and other resources, necessary o- appropriate to enable ARDC to perform such obligations, and shall not take or permit to be taken any action which would prevent or interfere with such performance. (b) The Borrower shall reland to ARDC for purposes of Part A of the Project the proceeds of the Credit to ARDC allocated to Categories (1) and (2) of paragraph 1, Schedule 1 to the Develop- ment Credit Agreement, under a subsidiary loan agreement to be entered into between the Borrower and ARDC under terms and condi- tions which shall have been approved by the Association and which shall include those set forth in Schedule 3 to this Agreement. (c) The Borrower shall exercise its rights under the Sub- sidiary Loan Agreement in such manner as to protect the interests of the Borrower and the Association and to accomplish the purposes of the Credit, and except as the Association shall otherwise agree, the Borrower shall not assign, amend, abrogate or waive the Subsidiary Loan Agreement or any provision thereof. (d) In order to carry out Part B of the Project, the Bor- rower shall, in accordance with the Borrower's normal arrangements for development assistance to the Borrower's agencies, make avail- able the proceeds of the Credit allocated in paragraph 1, Schedule 1 to the Development Credit Agreement: (i) under Category (3), to ARDC; and (ii) under Category (4), to ARDC and any State. -5- ARTICLE IV Other Covenants Sertion 4z01- The Borrower shall review the progress made by the cooperative credit system towards meeting the agricultural credit needs of farmers through one source or closely coordinated sources, and the Borrower shall, by December 31, 1980, or such other date as the Association may agree, inform the Association of the Borrower's findings and proposals arising from the said review. Section 4.02. The Borrower agrees to review the findings and recommendations of the survey on interest rate spreads conducted pursuant to Section 4.01 of the Development Credit Agreement (Second ARDC Credit Project), dated June 1, 1977, between the Borrower and the Association, and to complete the review and inform the Association by June 30, 1980 or such other date as the Association may agree, of the Borrower's proposals on the recommendations of the said survey. ARTICLE V Remedies of the Association Section 5.01. For the purposes of Section 6.02 of the General Conditions the following additional events are specified pursuant to paragraph (h) thereof: (a) The Agricultural Refinance and Development Corporation Act, No. 10 of 1963, as amended to the date of this Agreement, shall have been further amended, suspended, abrogated, repealed or waived so as, in the judgment of the Association, to materially affect the carrying out of the Project or the operations or financial condition of ARDC. (b) ARDC shall have failed to perform any covenant, agree- ment or obligation of ARDC under the Project Agreement or the Subsidiary Loan Agreement. (c) An extraordinary situation shall have arisen which shall make it improbable that ARDC will be able to perform its obliga- tions under the Project Agreement or under the Subsidiary Loan Agreement. -6- (d) The Borrower or any other authority having jurisdiction shall have taken any action for the dissolution or disestablish- ment of ARDC or for the suspension of its operations. (e) ARDC shall have become unable to pay any of its debts as they mature or any action or proceeding shall have been taken by ARDC or by others whereby any of the property of ARDC shall or may be distributed among its creditors. Section 5.02. For the purposes of Section 7.01 of the General Conditions, the following additional events are specified pursuant to paragraph (d) thereof: (a) any event specified in paragraph (b) of Section 5.01 of this Agreement shall occur and shall continue for a period of 60 days after notice thereof shall have been given by the Association to the Borrower and ARDC; and (b) any event specified in paragraphs (a), (c) and (d) of Section 5.01 of this Agreement shall occur. ARTICLE VI Effective Date; Termination Section 6.01. The following events are specified as addi- tional conditions to the effectiveness of the Development Credit Agreement within the meaning of Section 12.01 (b) of the General Conditions: (a) the execution and delivery of the Project Agreement on behalf of ARDC have been duly authorized or ratified by all necessary corporate and governmental action; and (b) the execution and delivery of the Subsidiary Loan Agree- ment on behalf of the Borrower and ARDC, respectively, have been duly authorized or ratified by all necessary corporate and govern- mental action. Section 6.02. The following are specified as additional matters, within the meaning of Section 12.02 (b) of the General Conditions, to be included in the opinion or opinions to be furnished to the Association: -7- (a) that the Project Agreement has been duly authorized or ratified by ARDC, and is legally binding upon ARDC in accor- dance with its terms; and (b) that the Subsidiary Loan Agreement has been duly autho- rized or ratified by the Borrower and ARDC and is legally binding upon the Borrower and ARDC in accordance with its terms. Section 5.03. The date November 20, 1979 is hereby speci- fied for the purposes of Section 12.04 of the General Conditions. ARTICLE VII Representative of the Borrower; Addresses Section 7.01. Any Secretary, Additional Secretary, Joint Secretary, Director or Deputy Secretary of the Department of Economic Affairs in the Ministry of Finance of the Borrower is designated as representative of the Borrower for the purposes of Section 11.03 of the General Conditions. Section 7.02. The following addresses are specified for the purpose of Section 11.01 of the General Conditions: For the Borrower: The Secretary to the Government of India Ministry of Finance Department of Economic Affairs New Delhi, India Cable address: Telex: ECOFAIRS 953-313546 New Delhi For the Association: International Development Association 1818 H Street, N.W. Washington, D.C. 20433 United States of America -8- Cable address: Telex: INDEVAS 440098 (ITT) Washington, D.C. 248423 (RCA) or 64145 (WUI) IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have caused this Agree- ment to be signed in their respective names in the District of Columbia, United States of America, as of the day and year first above written. INDIA By Is/ A. B. Gokhale Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By /s/ W. David Hopper Regional Vice President South Asia -9- SCHEDULE 1 Withdrawal of the Proceeds of the Credit 1. The table below sets forth the Categories of items to be financed out of the proceeds of the Credit, the allocation of the amounts of the Credit to each Category and the percentage of expenditures for items so to be financed in each Category: Amount of the Credit Allocated % of (Expressed in Expenditures Category Dollar Equivalent) to be Financed (1) Loans for minor 207,200,000 50% of the amount irrigation (ex- disbursed by ARDC cluding pumpset to refinance such electrification), loans land development, and soil conserva- tion/reclamation (2) Loans for other 41,500,000 50% of the amount agricultural disbursed by ARDC investments to refinance such loans (3) Training 1,000,000 50% (4) Irrigation equipment 300,000 50% TOTAL 250,000,000 2. The disbursement percentages have been calculated in com- pliance with the policy of the Association that no proceeds of the Credit shall be disbursed on account of payments for taxes levied by, or in the territory of, the Borrower on goods or services, or on the importation, manufacture, procurement or supply thereof; to that end, if the amount 6f any such taxes levied on or in respect of any item to be financed out of the proceeds of the Credi.t decreases or increases, the Association may, by notice to the Borrower, increase or decrease the disbursement percentage then applicable to such item as required to be consistent with the aforementioned policy of the Association. - 10 - 3. Disbursements under Category (2) in paragraph 1 above shall be made only against expenditures for other types of agricultural investments mutually agreed between the Borrower and the Associ- ation. 4. Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be made in respect of payments for expendituren made prior to the date of this Agreement. 5. Notwithstanding the allocation of an amount of the Credit or the disbursement percentages set forth in the table in para- graph 1 above, if the Association has reasonably estimated that the amount of the Credit then allocated to any Category will be insufficient to finance the agreed percentage of all expenditures in that Category, the Association may, by notice to the Borrower: (i) reallocate to such Category, to the extent required to meet the estimated shortfall, proceeds of the Credit which are then allocated to another Category and which in the opinion of the Association are not needed to meet other expenditures, and (ii) if such reallocation cannot fully meet the estimated shortfall, reduce the disbursement percentage then applicable to such expen- ditures in order that further withdrawals under such Category may continue until all expenditures thereunder shall have been made. 6. If the Association shall have reasonably determined that the procurement of any item in any Category is inconsistent with the procedures set forth or referred to in this Agreement, no expendi- tures for such item shall be financed out of the proceeds of the Credit and the Association may, without in any way restricting or limiting any other right, power or remedy of the Association under the Development Credit Agreement, by notice to the Borrower, cancel such amount of the Credit as, in the Association's reason- able opinion, represents the amount of such expenditures which would otherwise have been eligible for financing out of the proceeds of the Credit. - 11 - SCHEDULE 2 Description of the Project The Project consists of the following Parts: Part A: A two-year program to finance investments by Benefi- ciaries in minor irrigation and other agricultural projects through refinancing by ARDC of loans made by Participating Banks. Part B: (i) A program of training primarily for staff of Parti- cipating Banks. (ii) Provision of irrigation equipment for ARDC, Parti- cipating Banks and State Groundwater Organizations. The Project is expected to be completed by December 31, 1981. - 12 - SCHEDULE 3 Principal Lending Terms of Subsidiary Loan Agreement The following are the principal terms and conditions under which funds under the Credit shall be lent to ARDC by the Bor- rower: (a) In respect of ARDC refinancing not exceeding 9 years: (i) interest rate of 6.25% per annum, less 0.25% for prompt payment; and (ii) repayment at the end of 9 years. (b) In respect of ARDC refinancing in excess of 9, but not exceeding 15 years: (i) interest rate of 6.75% per annuml, less 0.25% for prompt repayment; and (ii) repayment at the end of 15 years. (c) The Borrower shall bear the foreign exchange risk.