India - Agricultural Refinance Corporation Credit Project : Credit 0540 - Credit Agreement - Conformed

CONFORMED COPY CREDIT NUMBER 540 IN Development Credit Agreement (Agricultural Refinance Corporation Credit Project) BETWEEN INDIA AND INTERNATIONAL DEVELOPMENT ASSOCIATION DATED APRIL 28, 1975 CONFORMED COPY CREDIT NUMBER 540 IN Development Credit Agreement (Agricultural Refinance Corporation Credit Project) BETWEEN INDIA AND INTERNATIONAL DEVELOPMENT ASSOCIATION DATED APRIL 28, 1975 DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated April 28, 1975, 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 Refinance Corporation (hereinafter called ARC) with the Borrower s assistance and, as part of such assistance, the Borrower will make available to ARC the proceeds of the Credit as hereinafter provided; and (C) The Association is willing to make the Credit available upon the terms and conditions set forth hereinafter and in a project agreement of even date herewith between the Association and ARC; 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 subject, however, to the following modification thereof (said General Conditions Applicable to Development Credit Agreements of the Association, as so modified being hereinafter called the General Conditions), namely, that in Section 2.01 , the following paragraph is substituted for paragraph 5: "5. The term 'Borrower' means India, acting by its President." 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: 4 (a) "ARC" means Agricultural Refinance Corporation, a statutory corporation established and organized under the laws of the Borrower, or any successor thereof; (b) "Project Agreement" means the agreement between the Association and ARC 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 ARC 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 a State or Union Territory of India. Where LDB is a federation of Primary Banks, "LDB" shall include all such Primary Banks and where, in such Union Territories, no such State Cooperative Land Development Bank is established, "LDB" means such cooperative bank as shall be approved by the Reserve Bank of India to take part in long-term agricultural lending operations; (e) "Participating Bank" means any LDB, State cooperative bank or commercial bank making loans which are, or are proposed to be, refinanced by ARC under the Project; (f) "Small Farmer" shall have the meaning assigned to it in Schedule 3 to the Project Agreement, as such Schedule may be amended from time to time by agreement between the Borrower, the Association and ARC; (g) "Beneficiary" means any person, group of persons, cooperative society, corporation or other entity which is eligible for receiving a loan from a Participating Bank under the Project; such term shall include the term "Small Farmer"; (h) "Scheme" means an agricultural development project agreed by ARC, the commercial banks and cooperative credit institutions operating in the area in which such project is located, and, when necessary, the Government of the State in which such area is located and under which ARC refinances the loans made by such banks and credit institutions; (i) "Category" means a category of the allocation of proceeds of the Credit set forth in Schedule I to this Agreement; and (j) "Rs" means rupees in the currency of the Borrower. 5 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 equivalent to seventy-five million dollars ($75,000,000). 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, 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. The Closing Date shall be December 31, 1977 or such other date as shall be agreed between the Borrower and the Association. Section 2.04. 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 2.05. Service charges shall be payable semi-annually on May 1 and November 1 in each year. Section 2.06. The Borrower shall repay the principal amount of the Credit in semi-annual installments payable on each May 1 and November 1 commencing May 1, 1985 and ending November 1, 2024, each installment to and including the installment payable on November 1, 1994 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 2.07. 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) The Borrower shall carry out the Project, or cause it to be carried out, with due diligence and efficiency and in conformity with sound 6 administrative, agricultural and financial practices, and shall plovide, promptly as needed, the funds, facilities, services and other resources required for the purpose. (b) Without any limitation or restriction upon any of its other obligations under the Development Credit Agreement, the Borrower shall cause ARC 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 or appropriate to enable ARC to perform such obligations, and shall not take or permit to be taken any action which would prevent or interfere with such performance. (c) The Borrower shall relend the proceeds of the Credit under Categories (1) and (2) to ARC under a subsidiary loan agreement to be entered into between the Borrower and ARC under terms and conditions which shall have been approved by the Association and which shall include those set forth in Schedule 3 to this Agreement. (d) The Borrower shall exercise its rights under the Subsidiary 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, nor amend, abrogate or waive the Subsidiary Loan Agreement or any provision thereof. (e) In order to assist ARC in carrying out the studies and training programs forming Parts B(ii) and B(iii) of the Project, the Borrower shall make available to ARC, on a grant basis the proceeds of the Credit under Category (3)(b). Section 3.02. In causing the study forming Part B(i) of the Project to be carried out, the Borrower shall ensure that the said study be completed not later than July 31, 1976, or such other date as the Association shall agree, inder terms of reference acceptable to the Association. ARTICLE IV Other Covenants Section 4.01. (a) The Borrower shall ensure that criteria for the issuance of all LDB debentures not purchased by ARC be as nearly as possible those set forth in Section 2.04 of the Project Agreement. (b) The Borrower shall ensure that a study be made of the requirements for the issuance of LDB debentures as well as the most efficient ways of 7 implementing such requirements. The said study shall be completed by institutions, and under terms of reference, acceptable to the Association, not later than July 31, 1976, or such other date as the Association shall agree. (c) The Borrower shall ensure that a committee be established with composition and terms of reference acceptable to the Association, for the purpose of monitoring LDB financial performance and the issuance of all LDB debentures. Section 4.02. The Borrower shall inform the Association as soon as practicable, of any proposed amendment to the Agricultural Refinance Corporation Act, No. 10 of 1963, or to any other legislation that would materially affect the operations and financial condition of ARC. Section 4.03. The Borrower shall ensure that the Central Groundwater Board furnish to the Association a list, acceptable to the Borrower and the Association, of specified areas in which there is a danger of over-exploitation of groundwater; such list shall be furnished not later than August 31, 1975 or such other date as the Association shall agree. 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: (a) the Agricultural Refinance 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 ARC. (b) ARC shall have failed to perform any covenant, agreement or obligation of ARC under the Project Agreement or the Subsidiary Loan Agreement. (c) An extraordinary situation shall have arisen which shall make it improbable that ARC will be able to perform its obligations under the Project Agreement or under the Subsidiary Loan Agreement. (d) The Borrower or any other authority having jurisdiction shall have taken any action for the dissolution or disestablishment of ARC or for the suspension of its operations. 8 (e) ARC shall have become unable to pay any of its debts as they mature or any action or proceeding shall have been taken by ARC or by others whereby any of the property of ARC 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: (a) the 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 (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 additional 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 ARC have been duly authorized or ratified by all necessary corporate and governmental action; (b) the execution and delivery of the Subsidiary Loan Agreement on behalf of the Borrower and ARC, respectively, have been duly authorized or ratified by all necessary corporate and governmental action; (c) the committee referred to in Section 4.01(c) of this Agreement has been duly established; and (d) ARC has furnished to the Association a training program, acceptable to the Association for Part B(iii) of the Project. 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: (a) That the Project Agreement has been duly authorized or ratified by, and executed and delivered on behalf of, ARC, and is legally binding upon ARC in accordance with its terms; and 9 (b) That the Subsidiary Loan Agreement has been duly authorized or ratified by, and executed and delivered on behalf of, the Borrower and ARC, is legally binding upon the Borrower and ARC in accordance with its terms. Section 6.03. The date July 28, 1975 is hereby specified for the purposes of Section 12.04 of the General Conditions. Section 6.04. The provisions of Section 4.02 of this Agreement and those of Section 4.03 of this Agreement shall cease and determine on the date on which the Development Credit Agreement shall terminate or on a date twenty years after the date of this Agreement, whichever shall be the earlier. ARTICLE VII Representative of the Borrower; Addresses Section 7.01. Any Secretary, Additional Secretary, Joint Secretary, Director or Deputy Director to the Government of India 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 purposes 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: ECOFAIRS New Delhi For the Association: International Development Association 1818 H Street, N.W. Washington, D.C. 20433 United States of America 10 Cable address: INDEVAS Washington, D.C. IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have caused this Agreement 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 /s / T. N. Kaul Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By /s / M. L. Weirer Regional Vice President South Asia 11 SCHEDULE 1 Withdrawal of the Proc!eds 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 69,000,000 55/( of the amount irrigation disbursed by ARC to refinance such loans (2) Loans for other 5,000,000 55% of the amount types of agri- disbursed by ARC cultural invest- to refinance such ments loans (3) Studies and Train- 50% ing: (a) under Part 200,000 B(i) of the Project (b) under Parts 800,000 B(ii) and B(iii) of the Project TOTAL 75,000,000 2. The disbursement percentages have been calculated in compliance 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 12 thereof; to that end, if any event occurs which shall affect the amount of any such taxes included in the cost of any item to be financed out of the proceeds of the Credit, the Association may, by notice to the Borrower, correspondingly adjust the disbursement percentage then applicable to such item. 3. Notwithstanding the provisions of paragraph I above, no withdrawals shall be made: (a) in respect of expenditures prior to the date of this Agreement; (b) in respect of expenditures under Category (1) and (2) after July 31, 1976, unless the Association has been furnished with evidence satisfactory to it that: (i) ARC's authorized capital has been increased to not less than five hundred million rupees; and (ii) such capital has been paid in amounts sufficient to ensure at all times that the debt-equity ratio of ARC, as such ratio is defined in Section 20(2) of the Agricultural Refinance Corporation Act (No. 10 of 1963), shall not exceed 20:1. 4. Notwithstanding the allocation of an amount of the Credit or the disbursement percentages set forth in the table in paragraph I 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 expenditures in order that further withdrawals under such Category may continue until all expenditures thereunder shall have been made. 5. 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 expenditures 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 reasonable opinion, represents the amount of such expenditures which would otherwise have been eligible for financing out of the proceeds of the Credit. 13 SCHEDULE 2 Description of the Project The Project consists of the following parts: A. A two-year program to finance investments by Beneficiaries in minor irrigation and other agricultural projects through the refinancing by ARC of loans made by Participating Banks. B. (i) A study on the feasibility of merging the short-term and long-term cooperative credit institutions; (ii) a study of the training needs of junior-level staff of LDB and the training of such staff; and (iii) an intensive, two-year training program primarily for senior and middle-level LDB staff. * * * P The Project is expected to be completed by June 30, 1977. 0 14 SCHEDULE 3 Principal Terms of Subsidiary Loan Agreement The following sets forth the principal terms and conditions under which funds equivalent to part of the proceeds of the Credit shall be lent to ARC by the Borrower: (a) In respect of ARC refinancing not exceeding 9 years: (i) interest rate of not less than 6-3/4% per annum less 1/4% for prompt payment; (ii) repayment at the end of 9 years. (b) In respect of ARC refinancing in excess of 9 but not exceeding 15 years: (i) interest rate of not less than 7-1/4% per annum less 1/4% for prompt payment; (ii) repayment at the end of 15 years. (c) The Borrower shall bear the foreign exchange risk.