Para 3.17.15 — MSO (Audit)
Original Rule Text
3.17.15 In India, reimbursement of claim system is adopted. The interest rate on the Bank loans ranges between 3 to 5 % and compensation for risk services is between 1 to 1.5%. Loans are repayable over 15 to 20 years with grace period of 3 to 5 years.
# Project decision and implementation
What This Means
India uses the reimbursement method for World Bank loans, meaning the government funds project expenditure first and then claims it back from the Bank. World Bank loans carry interest rates of 3-5% with an additional 1-1.5% for risk services. Loans are repayable over 15-20 years with a grace period of 3-5 years during which only interest is paid.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Key Points
- 1India follows the reimbursement system for World Bank aid
- 2Interest rates range from 3% to 5%
- 3Risk services charge is 1% to 1.5% additional
- 4Repayment period: 15-20 years with 3-5 year grace period
Practical Example
India receives a $300 million World Bank loan for an urban infrastructure project at 4% interest with a 1% commitment fee. Repayment begins after a 4-year grace period during which only interest is paid. The project implementing agency spends from budget allocations and periodically submits reimbursement claims through the Department of Economic Affairs. The Bank reimburses eligible expenditure after verifying withdrawal applications.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Frequently Asked Questions
What is the compensation for risk services?▼
Why does India use reimbursement rather than advance funding?▼
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.