The existing SBL of $17.5 billion is utilised almost completely, as the World Bank stepped up lending to development projects in India. The government has now asked it to raise the SBL to $21.8 billion, and the World Bank is soon expected to accede to India's demand, official sources said.
SBL refers to the cumulative amount disbursed to a country and not yet repaid. A higher SBL would enable World Bank to expand its loans to India. The World Bank follows the single country exposure limits, but it does not have any annual ceilings on the amount that it can lend to a country.
The finance ministry and the Planning Commission are pursuing the deliberations with the World Bank leadership to secure higher borrowing limit for India. An official familiar with the matter said that higher SBL for India reflected the deepening trade and economic ties between India and the US the largest shareholder in the World Bank.
The government could use these additional funds to re-capitalise public sector banks, the sources said. The increased limit would mainly apply to loans given by the International Bank for Reconstruction and Development, a lending arm of the World Bank, he said.
The credits given by the International Development Association (IDA) another arm of the Bank are not included in this SBL. While IDA credits are interest-free, IBRD extends long-term loans at low interest rates. The World Banks total net commitments to India stood at $23.4 billion as of March 2012, comprising IBRD loans of $15.6 billion and IDA credit of $7.8 billion across 75 projects.
India has so far borrowed a total of $62.36 billion from multilateral and bilateral donor countries and institutions, as per finance ministry data.
In 2011, the World Bank raised its SBL for India to $17.5 billion from $15.5 billion, after nearly a year of negotiations between New Delhi and Washington. It had also earmarked $3 billion to support India in mitigating the adverse impact of the global economic crisis, which included a $2-billion package for recapitalisation of public sector banks.