Does ADB provide loans to state Governments?
ADB provides loans in US dollars to India. In the case of state level loans, the Government of India (GOI) passes this on to states as “Additional Central Assistance.” GOI absorbs commitment charges and front-end fees payable to ADB, and assumes the foreign exchange rate risk. The state gets a pure rupee loan, free from exchange risk for the net amount. The GOI rupee loan is repayable by the state over a period of 15 years. Of the total loan drawn down each year, 50% is to be repaid over 15 years starting from the subsequent fiscal year. The remaining 50% is repayable starting from the sixth to the fifteenth year.
