A part of the loan would go to projects in South India.
Sources close to the development said Japanese Prime Minister Yoshihiko Noda has informed Prime Minister Manmohan Singh that about the loan sanction at their meeting here ahead of the East Asia summit.
Both prime ministers also discussed bilateral issues, including cooperation between their respective naval forces and coast guards. Railways is constructing the 3,300-km project under through the Dedicated Rail Corridor Corporation of India, a special purpose vehicle.
The Eastern Corridor, starting from Ludhiana in Punjab will pass through the states of Haryana, Uttar Pradesh, Bihar and terminate at Dankuni in West Bengal. The Western Corridor will traverse the distance from Dadri to Mumbai, passing through the states of Delhi, Haryana, Rajasthan, Gujarat and Maharashtra.