The Union Cabinet today gave its approval for entering into Special Private Placement Bonds (SPPBs) arrangement with International Bank for Reconstruction and Development (IBRD) (part of World Bank Group) for enabling India to have additional borrowing space of US $ 4.3 billion above the Single Borrower Limit (SBL), RBI would invest in SPPBs of the IBRD. The IBRD would be able to lend to India US$ 4.3 billion above the Single Borrower Limit of US$ 17.5 billion, i. e. up to US$ 21.8 billion.

The Cabinet also approved the Government of lndia signing the following Agreement/Memorandum of Understanding:-

a) Framework Agreement between Government of lndia and the IBRD.

b) Memorandum of Understanding between Government of lndia and the RBI.

The investment by the RBI is to ameliorate the concentration risk policy of the IBRD loans to India. The same terms and conditions that is generally applicable for IBRD loans to all clients, including India, will be applicable for the loans above the SBL.

The additional borrowing space will enable Government of India to commit new projects with World Bank (IBRD) assistance. Government of India gives preference to projects in low income and special category States, as well as to projects aimed at fostering inclusive growth.

The proposal will enable leveraging World Bank’s knowledge base and global reach for transfer of knowledge, adoption of good practices, reforms of processes and systems and capacity building.

Special Private Placement Bonds increase India's borrowing capacity above the single borrower limit, enabling additional World Bank lending. Approval authorises a Special Private Placement Bonds arrangement with the IBRD under which the RBI will invest in SPPBs so the IBRD can lend to India above the Single Borrower Limit; such loans will follow the same terms and conditions applicable to general IBRD lending. A Framework Agreement with the IBRD and a Memorandum of Understanding with the RBI will govern implementation, with the RBI investment intended to reduce concentration risk and the additional borrowing space to support World Bank-assisted projects prioritising low-income and special-category States and inclusive growth.