Why in the News?

India extended a ₹487.60 crore Line of Credit (LOC) to Mauritius for replacing 100 km of obsolete water pipelines. This is the first rupee-denominated credit under the Indian Development and Economic Assistance Scheme (IDEAS), financed by the State Bank of India at concessional terms. The offer was made by External Affairs Minister Dr. S. Jaishankar and accepted by Mauritius. The initiative highlights India’s commitment to the socio-economic development of Global South countries.

What is a Line of Credit (LOC)?

• It is a preset borrowing limit offered by banks to personal or business customers.
• Borrowers can access funds at any time until the limit is reached and can borrow again after repayment (in open LOCs).
• The limit is set based on the borrower’s creditworthiness.
• Funds can be drawn as long as the credit limit is not exceeded.