India - Rajasthan Dairy Development Project : Credit 0521 - Project Agreement - Conformed

CONFORMED COPY CREDIT NUMBER 521 IN Project Agreement (Rajasthan Dairy Development Project) BETWEEN INTERNATIONAL DEVELOPMENT ASSOCIATION AND AGRICULTURAL REFINANCE CORPORATION DATED DECEMBER 18, 1974 PROJECT AGREEMENT AGREEMENT, dated December 18, 1974, between INTERNATIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Association) and AGRICULTURAL REFINANCE CORPORATION (hereinafter called ARC). WHEREAS by the Development Credit Agreement of even date herewith between INDIA, acting by its President (hereinafter called the Borrower) and the Association, the Association has agreed to make available to the Borrower an amount in various currencies equivalent to twenty seven million seven hundred thousand dollars ($27,700,000), on the terms and conditions set forth in the Development Credit Agreement, but only on condition, inter alia, that ARC agree to undertake the obligations toward .the Association hereinafter set forth; WHEREAS by an agreement of even date herewith between the State of Rajasthan and the Association, the said State has agreed to undertake certain obligations in respect of the carrying out of the Project; WHEREAS by a subsidiary loan agreement of even date herewith between the Borrower and ARC, the proceeds of the credit provided for under the Development Credit Agreement will be made available to ARC on the terms and conditions therein set forth; and WHEREAS ARC, in consideration of the Association's entering into the Development Credit Agreement with the Borrower, has agreed to undertake the obligations hereinafter set forth; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I Definitions Section 1.01. Wherever used in this Agreement, unless the context shall otherwise require, the several terms defined in the Development Credit Agreement and in the General Conditions (as so defined) have the respective meanings therein set forth. 4 ARTICLE II Execution of the Project Section 2.01. ARC shall provide assistance in the carrying out with due diligence and efficiency and in conformity with appropriate agricultural, administrative, financial and engineering practices, of Parts A, B2 and B3 of the Project described in Schedule 2 to the Development Credit Agreement and shall provide, or cause to be provided, promptly as needed, the funds, facilities, services and other resources required for the purpose. Section 2.02. ARC shall enter into a Subsidiary Loan Agreement with the Borrower on terms and conditions (including inter alia those set forth in Schedule 3 to the Development Credit Agreement) satisfactory to the Association. ARC shall duly perform all its obligations under the Subsidiary Loan Agreement. Except as the Association shall otherwise agree, ARC shall not take or concur in any action which would have the effect of amending, abrogating, assigning or waiving the Subsidiary Loan Agreement or any provision thereof. Section 2.03. (a) ARC shall promptly invite LDB, RSCB and the banks listed in the Second Schedule to the Reserve Bank of India Act, 1934, to participate in the Project on terms and conditions (including inter alia those set forth in paragraph I of Schedule I to this Agreement) satisfactory to the Association. (b) ARC shall establish a list of eligible banks based on criteria agreed with the Association, including inter alia, the requirement that in the case of LDB, its collection rate shall be at least 65%, and, in addition, any amount required to reduce overdues as a percentage of payments of principal and interest of loans falling due during the fiscal year ending June 30 of each year to 25% shall be financed by Rajasthan by purchase of redeemable equity. (c) ARC shall enter into agreements with Participating Banks in accordance with the provisions of Section 3.06 of the Development Credit Agreement and the provisions of paragraph (b) of this Section on terms and conditions (including inter alia those set forth in paragraph I of Schedule 1 to this Agreement) satisfactory to the Association. Section 2.04. (a) ARC shall require Participating Banks to jointly organize a project supervision group constituted with the approval of, and presided over by, ARC to oversee the lending program set up in accordance with the provisions of Section 2.03 of this Agreement. 5 (b) ARC shall: (i) require Participating Banks to maintain separate accounts for Project lending and (ii) ensure that the annual audited accounts of such Banks are submitted to the Association within four months of the end of their fiscal year together with a statement of Project lending for such Banks, certified by ARC. Section 2.05. The lending terms and conditions for carrying out Parts A, B2 and B3 of the Project shall be as set forth in Schedule I to this Agreement, as such Schedule may be amended from time to time by agreement between the Borrower, ARC and the Association. Section 2.06. Except as the Association shall otherwise agree, the goods, works and services (other than consultants' services) for the Project and to be financed out of the proceeds of the Credit shall be procured in accordance with the provisions set -forth or referred to in Section 2.07 of, and Schedule I to, the Rajasthan Agreement. Section 2.07. ARC: (i) shall maintain Project accounts adequate to record the progress of Parts A, B2 and B3 of the Project (including the cost thereof) and to identify the goods and services financed out of the proceeds of the Credit relent to it by the Borrower, and to disclose the use thereof in the Project; (ii) shall enable the Association's representatives to examine the goods financed out of such proceeds and any relevant records and documents; and (iii) shall furnish to the Association all such information as the Association shall reasonably request concerning the Project, the expenditure of the proceeds of the Credit so relent to it and the goods and services financed out of such proceeds. Section 2.08. ARC and the Association shall cooperate fully to assure that the purposes of the Credit will be accomplished. To that end, ARC and the Association shall from time to time, at the request of either party, exchange views through their representatives with regard to the performance of their respective obligations under this Agreement, the Project, and other matters relating to the purpose of the Credit. Section 2.09. ARC and the Association shall promptly inform each other of any condition which interferes with, or threatens to interfere with, the accomplishment of the purposes of the Credit, or the performance by either of them of its obligations under this Agreement. Section 2.10. ARC shall ensure the requisite availability of loans under existing or new lending arrangements, to eligible members of the DCS for minor irrigation for forage production. 6 ARTICLE III Management and Operations of ARC Section 3.01. ARC shall: (a) at all times manage its affairs, maintain its financial position, plan its future expansion and carry on its operations, all in accordance with sound business and financial practices and under the supervision of experienced and competent management assisted by experienced and competent staff in adequate numbers; and (b) take all steps necessary to acquire, maintain and renew all rights, powers, privileges and franchises which are necessary or useful in the conduct of its business or in the carrying out of the Project. ARTICLE IV Financial Covenants Section 4.01. ARC shall maintain records adequate to reflect in accordance with consistently maintained appropriate accounting practices its operations and financial condition. Section 4.02. ARC shall: (i) have its accounts and financial statements (balance sheets, statements of income and expenses and related statements) for each fiscal year audited, in accordance with sound auditing principles consistently applied, by independent auditors acceptable to the Association; (ii) furnish to the Association as soon as available, but in any case not later than four months after the end of each such year, (A) certified copies of its financial statements for such year as so audited and (B) the report of such audit by said auditors, of such scope and in such detail as the Association shall have reasonably requested; and (iii) furnish to the Association such other information concerning the accounts and financial statements of ARC and the audit thereof as the Association shall from time to time reasonably request. ARTICLE V Effective Date; Termination; Cancellation and Suspension Section 5.01. This Agreement shall come into force and effect on the date upon which the Development Credit Agreement becomes effective. Section 5.02. (a) This Agreement and all obligations of the Association and of ARC thereunder shall terminate on the earlier of the following two dates: 7 (i) the date on which the Development Credit Agreement shall terminate in accordance with its terms; or (ii) a date 25 years after the date of this Agreement. (b) If the Development Credit Agreement terminates in accordance with its terms before the date specified in paragraph (a)(ii) of this Section, the Association shall promptly notify ARC of this event. Section 5.03. All the provisions of this Agreement shall continue in full force and effect notwithstanding any cancellation or suspension under the Development Credit Agreement. ARTICLE VI Miscellaneous Provisions Section 6.01. Any notice or request required or permitted to be given or made under this Agreement and any agreement between the parties contemplated by this Agreement shall be in writing. Such notice or request shall be deemed to have been duly given or made when it shall be delivered by hand or by mail, telegram, cable, telex or radiogram to the party to which it is required or permitted to be given or made at such party's address hereinafter specified or at such other address as such party shall have designated by notice to the party giving such notice or making such request. The addresses so specified are: For the Association: International Development Association 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: INDEVAS Washington, D.C. 8 For ARC: Managing Director Agricultural Refinance Corporation Shri Niketan F Block Shiv Sagar Estate Dr. Annie Besant Road Worli, Bombay, 400018 India Cable address: AGREFINANS Bombay Section 6.02. Any action required or permitted to be taken, and any documents required or permitted to be executed, under this Agreement on behalf of ARC may be taken or executed by its Managing Director or such other person or persons as ARC shall designate in writing. Section 6.03. ARC shall furnish to the Association sufficient evidence of the authority and the authenticated specimen signature of the person or persons who will, on behalf of ARC, take any action or execute any documents required or permitted to be taken or executed by ARC pursuant to any of the provisions of this Agreement. Section 6.04. This Agreement may be executed in several counterparts, each of which shall be an original, and all collectively but one instrument. IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have caused this Agreement to be signed 9 in their respective names in the District of Columbia, United States of America, as of the day and year first above written. INTERNATIONAL DEVELOPMENT ASSOCIATION By /s/ Mervyn L. Weiner Regional Vice President South Asia AGRICULTURAL REFINANCE CORPORATION By /s/ T. N. Kaul Authorized Representative 10 SCHEDULE 1 Principal Terms and Conditions of Relending 1. ARC to Participating Banks (a) Annual interest rate to be not less than 8%. (b) Installment repayments to coincide approximately with collections from ultimate borrowers; and (c) Refinancing by purchase of debentures or loans at the rate of not less than 80% of loans to RDDC and Unions under the Project. 2. Participating Banks to RDDC and Unions (a) Annual interest rate to be not less than 11%. (b) Grace period to be not more than six years; (c) Total loan period not exceeding fifteen years including the grace period; (d) A 20% down payment shall be required; and (e) Such security as shall be prescribed by ARC.