India - National Cooperative Development Corporation (NCDC) III Project : Credit 1502 - Credit Agreement - Conformed

CREDIT NUMBER 1502 IN I OFFICIAL DOCUMENTS Development Credit Agreement (National Cooperative Development Corporation (NCDC) III Project) between INDIA and INTERNATIONAL DEVELOPMENT ASSOCIATION Dated , 1984 CREDIT NUMBER 1502 IN DEVELOPMENT CREDIT AGREEME AGREEMENT, dated , 1984, 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 the National Cooperative Development Corporation (hereinafter called NCDC) with the Borrower's assistance and, as part of such assistance, the Borrower will make available to NCDC the proceeds of the Credit as hereinafter provided; and WHEREAS 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 NCDC; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I General Ccuditions; 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 June 30, 1980, 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) "NCDC" means the National Cooperative Development Cor- poration, a Corporation established and operating under The National Cooperative Development Corporation Act, 1962, of the Borrower; -2- (b) "Project Agreement" means the agreement between the Association and NCDC of even date herewith, as the same may be amended from time to time, and such term includes all schedules to the Project Agreement and all agreements supplemental to the Project Agreement; (c) "Subsidiary Loan Agreement" means the agreement to be entered into between the Borrower and NCDC pursuant to Sec- tion 3.01 (b) of this Agreement, as the same may be amended from time to time, and such term includes all schedules to the Subsi- diary Loan Agreement; (d) "Andhra Pradesh", "Haryana", "Karnataka", "Madhya Pradesh", "Maharashtra", "Orissa", "Rajasthan", "Uttar Pradesh" and "West Bengal" mean respectively the following States of India: State of Anahra Pradesh, State of Haryana, State of Karnataka, State of Madhya Pradesh, State of Maharashtra, State of Orissa, State of Rajasthan, State of Uttar Pradesh and State of West Bengal; (e) "Participating States" mean collectively the States of India listed in paragraph (d) above; (f) "Cooperative" means a primary cooperative society, a Marketing Federation or the Oilseed Federation, all established and operating pursuant to the relevant laws of the Participating State; (g) "Participating Cooperative" means a Cooperative in receipt of a Sub-loan; (h) "Cooperative Bank" means a state cooperative bank established and operating pursugnt to the applicable law of each Participating State; (i) "Land Bank" means the State Land Development Bank of West Bengal established and operating pursuant to laws of West Bengal; (j) "Participating Bank" means the Land Bank and any Co- operative Bank which is authorized to make Sub-loans under the Project; (k) "Marketing Federation" means an apex cooperative of marketing cooperatives established by a Participating State; -3- (1) "Oilseed Federation" means the State Cooperative Oil- seed Growers Federation of Madhya Pradesh established and opera- ting pursuant to the Madhya Pradesh Cooperative Societies Act, No. 17,dated May 12, 1961, as amended; (m) "Cotton Cooperative" means a Cotton Growers Cooperative established by a Participating State; (n) "NCDC Loan" means a loan made or proposed to be made by NCDC to a Participating Bank, out of the equivalent of the proceeds of the Credit relent to NCDC by the Borrover pursuant to Section 3.01 of this Agreement, for the purpose of refinancing Sub-loans made by the Participating Bank to Cooperatives for the Sub-projects; (o) "NCDC Investment Loan" means a loan made by NCDC to a Participating State for purposes of equity contribution to a Cooperative for a Sub-project; (p) "Sub-loan" means a loan made or proposed to be made by a Participating Bank, out of the proceeds of the NCDC Loan to a Cooperative for a Sub-project; (q) "Sub-project" means a specific project to be carried out by a Cooperative utilizing the proceeds of a Sub-loan and the equity contribution made by a Participating State; (r) "Recovery Rate" means the ratio (expressed in terms of a percentage) between (A) the aggregate amount of principal and interest on loans paid during any Cooperative Year pursuant to obligations that fell due during or before such year, and (B) the aggregate amount of principal and interest on loans that are due during such year; (s) "Rs" means Rupees, the currency of the Borrower; and (t) "Cooperative Year" means the year commencing July 1 and ending on June 30. ARTICLE II The Credit Section 2.01. The Association agrees to lend to the Bor- rower, on the terms and conditions set forth or referred to in -4- this Agreement, an amount in various currencies equivalent to two hundred ten million two hundred thousand Special Drawing Rights (SDR2100200,000). 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 Association, 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 required for the Project and to be financed out of the proceeds of the Credit shall be governed by the provisions of Schedule 1 to the Project Agreement. Section 2.04. The Closing Date shall be June 30, 1989 or such later date as the Association shall establish. The Associa- tion shall promptly notify the Borrower of such later date. Section 2.05. (a) The Borrower shall pay to the Association a commitment charge at the rate of one-half of one per cent (1/2 of 1%) per annum on the principal amount of the Credit not with- drawn from time to time. The commitment charge shall accrue from a date sixty days after the date of the Development Credit Agree- ment to the respective dates on which amounts shall be withdrawn by the Borrower from the Credit Account or shall be cancelled. (b) The commitment charge shall be paid: (i) at such places as the Association shall reasonably request; (ii) without re- strictions of any kind imposed by, or in the territory of, the Borrower; and (iii) in the currency specified in this Agreement for the purposes of Section 4.02 (,,f the General Conditions or in suc.- other eligible currency or currencies as may from time to time be designated or selected pursuant to the provisions of that Section. Section 2.06. 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. -5- Section 2.07. Commitment charges and service charges shall be payable semiannually on May 15 and November 15 in each year. Section 2.08. The Borrower shall repay the principal amount of the Credit in semiannual installments payable on each May 15 and November 15 commencing November 15, 1.994, and ending May 15, 2034, each installment to and including the installment payable on May 15, 2004, 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 2.09. The currency of The United States of America 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 declares its commitment to the objectives of the Project as set forth in Schedule 2 to this Agreement, and, to this end, without any limitation or restric- tion upon any of its other obligations under the Development Credit Agreement, shall cause NCDC to perform in accordance with the provisions of the Project 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 NCDC 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: (i) relend the proceeds of the Credit allocated to Category 1 set forth in Schedule 1 to this Agreement, to NCDC under an agreement to be entered into between the Borrower and NCDC under terms and conditions which shall have been approved by the Association which shall include interest at an effective rate of not less than 7% per annum on the principal amount so relent and withdrawn by NCDC and outstanding from time to time and repayment over a period of fifteen years, including therein a period of grace of three years; and (ii) make available to NCDC the proceeds of the Credit allocated to other Categories of such Schedule under the said Agreement. (c) The Borrower shall exercise its rights under the Subsi- diary Loan Agreement in such manner as to protect the interests -6- of the Borrower and the AGaociation and to accomplish the pur- poses of the Credit, and except as the Association shall other- wise agree, the Borrower shall not assign, amend, abrogate or waive the Subsidiary Loan Agreement or any provision thereof. ARTICLE IV Remedies of the Association Section 4.01. For the purposes of Section 6.02 of the Gen- eral Conditions the following additional events are specified pursuant to paragraph (h) thereof: (a) NCDC shall have failed to perform any of its obliga- tions under the Project Agreement; (b) as a result of events which have occurred after the date of the Development Credit Agreement, an extraordinary situa- tion shall have arisen which shall make it improbable that NCDC will be able to perform its obligations under the Project Agree- ment; (c) The National Cooperative Development Corporation Act, 1962 of the Borrower shall have been amended, suspended, abroga- ted, repealed or waived so as to affect materially and adversely the ability of NCDC to perform any of its obligations under the Project Agreement; (d) the Borrower or any other authority having jurisdiction shall have taken any action for the dissolution or disestablish- ment of NCDC or for the suspension of its operations; and (e) NCDC shall have become unable to pay any of its debts as they mature or any action or proceeding shall have been taken by NCDC or by others whereby any of the property of NCDC shall or may be distributed among its creditors. Section 4.02. For the purposes of Section 7.01 of the General Conditions, the following additional events are specified pursuant to paragraph (d) thereof: -7- (a) the event specified in paragraph (a) of Section 4.01 of this Agreement shall occur and shall continue for a period of 60 days after notice thereof shall have been given by the Associa- tion to the Borrower and NCDC; and (b) any event specified in paragraphs (c), (d) and (e) of Section 4.01 of this Agreement shall occur. ARTICLE V Effective Date; Termination Section 5.01. The following event is specified as an addi- tional condition to the effectiveness of the Development Credit Agreement within the meaning of Section 12.01 (b) of the General Conditions, namely, that the Subsidiary Loan Agreement has been executed on behalf of the Borrower and NCDC. Section 5.02. The following are specified as additional mat- ters within the meaning of Section 12.02 (b) of the General Con- ditions, to be included in the opinion or opinions to be fur- nished to the Association: (a) that the Project Agreement has been duly authorized or ratified by NCDC, and is legally binding upon NCDC in accordance with its terms; and (b) that the Subsidiary Loan Agreement has been duly autho- rized or ratified by the Borrower and NCDC and is legally binding upon the Borrower and NCDC in accordance with its terms. Section 5.03. The date) "o is hereby specified for the purposes of Section 12. 4 of the General Condi- tions. Section 5.04. The obligations of the Borrower under Section 4.02 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. -8- ARTICLE VI Representative of the Borrower; Addresses Section 6.01. Any Secretary, Additional Secretary, Joint Secretary, Deputy Secretary or Under 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 6.02. 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 953313546 New Delhi For the Association: International Development Association 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: Telex: INDEVAS ITT 440098 Washington, D.C. -9- 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 Authorized Representative INTERNATIONAL DVELOPMENT ASSOCIATION By , ertA/6 Regional Vice President South Asia - 10 - SCHEDULE 1 Withdrawal of the Proceeds of the Credit 1. The table below sets fcrth 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 SDR Equivalent) to be Financed (1) NCDC Loans under 199,220,000 85% Part A of the Project (2) Civil Works under 1,620,000 50% Part B of the Project (3) Office and teach- 1,720,000 70% ing equipment and vehicles under Parts B and C of the Project (4) Local training 3,630,000 50% (5) Fellowships 190,000 100% (6) Cooperative 3,820,000 50% Development Service (incre- mental staff expenditures and operating costs) TOTAL 210,200,000 - 11 - 2. For the purposes of this Schedule: the term "incremental staff expenditures" means the expenditures in respect of addi- tional staff costs for purposes of the Project as agreed between the Association and the Borrower. 3. The disbursement percentages have been calculated in com- pliance with the policy of the Association that the proceeds of the Credit shall not 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; on this basis, if the amount of any such taxes levied on or in respect of items in any Category decreases or increases, the Association may, by notice to the Borrower, in- crease or decrease the disbursement percentage then applicable to such Category as required to be consistent with the aforemen- tioned policy of the Association. 4. Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be made in respect of payments made for expen- ditures prior to the date of this Agreement, except that withdra- wals, in an aggregate amount not exceeding the equivalent of SDR 1,000,000, may be made in respect of any Category on account of payments made for expenditures before that date but after January 1, 1984. 5. Notwithstanding the allocation of an amount of the Credit or the disbursement percentages set forth in the table in paragraph 1 above, if the Association has reasonably estimated that the amount of the Credit then allocated to any Category will be in- sufficient 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 tha 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 expen- diture for such item shall be financed out of the proceeds of the Credit, and the Association may, without in any way restricting - 12 - or limiting any other right, power or remedy of the Association under the Development Credit Agreement, by notice to the Bor- rower, 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 objectives of the Project are: (i) to meet pre-harvest and post-harvest service and agro-processing requirements, through the construction of rural storage, soybean processing and cotton processing facilities; (ii) to promote the production of soybean, through the establishment of Cooperative Development Services; and (iii) to improve the operations and management of the cooperative institutions involved in the Project by manpower planning and training programs. The Project consists of the following Parts: Part A: Provision of NCDC Loans to Participating Banks for the establishment of: (i) about 7,800 rural godowns for the storage of agricul- tural inputs and outputs with capacities ranging from about 50 tons to 10,000 tons, to be located in Karna- taka, Madhya Pradesh, Orissa, Rajasthan, Uttar Pradesh, and West Bengal; (ii) processing facilities to be located as follows: (1) one soybean seed processing plant in Rajasthan of a capa- city of about 2.5 tons throughput per hour, (2) two soybean seed processing plants in Madhya Pradesh of a capacity of about 5 tons throughput per hour, (3) one solvent oil extraction plant for soybean in Rajasthan of a capacity of about 200 tons throughput per day, (4) three solvent oil extraction plants for soybean in Madhya Pradesh of a capacity of about 200 tons through- put per day, (5) one solvent oil extraction plant for cottonseed in Haryana of a capacity of about 100 tons throughput per day, (6) one solvent oil extraction plant for cottonseed in Karnataka of a capacity of about 100 tons throughput per day, (7) one solvent oil extraction plant for cottonseed in Maharashtra of a capacity of about 100 tons throughput per day, (8) one solvent oil extraction plant for cottonseed in Rajas- than of a capacity of about 100 tons throughput per day, (9) four ginneries equipped with sawgins, two each in Haryana and Rajasthan, each with a capacity of about 5,440 tons (lint) per annum and together with - 14 - a baling press, (10) two ginneries equipped with saw- gins or double roller gins, as the case may be, in Maharashtra, each with a capacity of about 3,570 tons (lint) per annum and together with a baling press, (11) five ginneries equipped with sawgins or double roller gins, as the case may be, two in Maharashtra, two in Karnataka and one in Andhra Pradesh, each with a capa- city of about 5,440 tons (lint) per annum and together with a baling press, (12) three ring-frame spinning mills, one in Andhra Pradesh, one in Karnataka and one in Maharashtra, each with a capacity of about 25,000 spindles, and (13) two spinning mills, open-end (unless otherwise agreed with the Association), one in Haryana and one in Rajasthan, each with a capacity of about 25,000 spindles equivalent. Part B: (i) Establishment of new, or upgrading, as appropriate, of training institutes for the agricultural cooperative staff, one each in Karnataka, Madhya Pradesh, Orissa, Rajasthan, Uttar Pradesh and West Bengal; (ii) Provision of office and teaching equipment, and vehi- cles for NCDC's Center for Cooperative Trainers' Train- ing and Materials Production; (iii) Provision of teaching equipment for the Participating States' Cooperative Training Centers and Mobile Train- ing Units; and (iv) Training and fellowships for the staff of NCDC and the Participating Cooperatives. Part C: Establishment of the cooperative development services for soybean production to cover five administrative districts in Rajasthan and 15 administrative districts in Madhya Pradesh. The Project is expected to be completed by December 31, 1988. INTERNATIONAL DEVELOPMENT ASSOCIATION CERTIFICATE I hereby certify that the foregoing is a true copy of the original in the archives of the Interna- tional Development Association. In witness whereof I have signed this Certifi- cate and affixed the Seal of the Association thereunto the A day of 198 FOR SECRETARY