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Development Credit Agreement Between the Republic of Vanuatu and the International Development Association (Ratification) Act 1993

Commencement: 05 July 1993


REPUBLIC OF VANUATU


DEVELOPMENT CREDIT AGREEMENT BETWEEN THE REPUBLIC OF VANUATU AND THE INTERNATIONAL DEVELOPMENT ASSOCIATION (RATIFICATION) ACT
NO. 8 OF 1993


Arrangement of Sections


1. Ratification
2. Commencement
Schedule


-----------------------------------------


REPUBLIC OF VANUATU


Assent: 21/06/93
Commencement: 05/07/93


DEVELOPMENT CREDIT AGREEMENT BETWEEN THE REPUBLIC OF VANUATU AND THE INTERNATIONAL DEVELOPMENT ASSOCIATION (RATIFICATION) ACT
NO. 8 OF 1993


An Act to provide for the ratification of the Development Credit Agreement between the Republic of Vanuatu and the International Development Association signed on the 16th day of October, 1991.


BE IT ENACTED by the President as follows:


RATIFICATION


  1. (1) The Development Credit Agreement made between the Republic of Vanuatu and the International Development Association signed on the 16th day of October, 1991 which is set out in the Schedule hereto is hereby ratified.

(2) The Agreement referred to in subsection (1) shall be binding on the Republic of Vanuatu in accordance with the terms thereof.


COMMENCEMENT


2. This Act shall come into force on the date of its publication in the Gazette.


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SCHEDULE


===============================================================


CREDIT NUMBER 2262 VA


Development Credit Agreement


(Housing Project)


Between


REPUBLIC OF VANUATU


And


INTERNATIONAL DEVELOPMENT ASSOCIATION


Dated: October 16, 1991


===============================================================


CREDIT NUMBER 2262 VA


DEVELOPMENT CREDIT AGREEMENT


AGREEMENT, dated October 16, 1991 between REPUBLIC OF VANUATU (the Borrower) and INTERNATIONAL DEVELOPMENT ASSOCIATION (the Association).


WHEREAS: (A) the Borrower, having satisfied itself as to the feasibility and priority of the Project described in Schedule 2 to this Agreement, has requested the Association to assist in the financing of the Project;


(B) pursuant to a letter agreement dated July 30 1990, between Japan and the Association, Japan has requested the Association, and the Association has agreed, to administer grant funds to be made available by Japan for the financing of certain programs and projects supported by the Association in accordance with the provisions of such letter agreement;


(C) Japan has made available to the Borrower a grant (the Japanese Grant) in an amount of VT25,000, out of said funds to assist the Borrower in carrying out a portion of the technical assistance under the Project in accordance with the terms and conditions of the agreement to be entered into between the Borrower and the Association as Administrator of Grant Funds provided by Japan (hereinafter the "Japanese Grant Agreement"); and


(D) a part of the Project will be carried out by National Housing Corporation (NHC with the Borrower's assistance and, as part of such assistance, the Borrower will make available to NHC a part of the proceeds of the Credit as provided in this Agreement;


WHEREAS the Association has agreed, on the basis, inter alia, of the foregoing, to extend the Credit to the Borrower upon the terms and conditions set forth in this Agreement and in the Project Agreement of even date herewith between the Association and NHC;


NOW THEREFORE the parties hereto hereby agree as follows:


ARTICLE I


General Conditions; Definitions


Section 1.01. The "General Conditions Applicable to Development Credit Agreements" of the Association, dated January 1, 1985, with the last sentence of Section 3.02 deleted (the General Conditions) constitute an integral part of this Agreement.


Section 1.02. Unless the context otherwise requires, the several terms defined in the General Conditions and in the Preamble to this Agreement have the respective meanings therein set forth and the following additional terms have the following meanings:


(a) "eligible beneficiary" means residents of Vanuatu with household incomes of 80,000 VT per month (gross) or less as adjusted from time to time in a manner satisfactory to the Association, and who do not own a dwelling or property in the vicinity of Port Vila or Luganville;


(b) "Housing Refinance Facility" or "HRF" means that facility established in accordance with the terms of Section 3.04 of this Agreement;


(c) "NHC" means the Borrower's National Housing Corporation, established by, operating under, the National Housing Corporation Act (No. 37 of 1985);


(d) "Participation Agreement" means that agreement entered into between the Borrower and a PI in accordance with the provisions of Section 3.05 of this Agreement;


(e) "Participating Intermediary" or "PI" means any bank or other financial institution, which has been appraised by the Borrower and after consultation is satisfactory to the Borrower and to the Association, and which will on lend funds under the Project;


(f) "Policy Statement" means the statement adopted by the Board of NHC in November 1989, setting out the objectives, policies, programs and procedures of NHC;


(g) "Project Agreement" means the agreement between the Association and National Housing Corporation (NHC), of even date herewith, as the same may be amended from time to time, and such term includes all schedules and agreements supplemental to the Project Agreement;


(h) "Special Account" means the account referred to in Section 2.02(b) of this Agreement; and


(i) "VT" or "vatu" means the currency of the Borrower.


ARTICLE II


The Credit


Section 2.01. The Association agrees to lend to the Borrower, on the term and conditions set forth or referred to in the Development Credit Agreement, an amount in various currencies equivalent to two million five hundred thousand Special Drawing Rights (SDR 2,500,000).


Section 2.02. (a) The amount of the Credit may be withdrawn from the Credit Account in accordance with the provisions of Schedule 1 to this Agreement for expenditures made (or, if the Association shall so agree, to be made) in respect of the reasonable costs of goods and services required for the Project and to be financed out of the proceeds of the Credit.


(b) The Borrower shall, for the purposes of the Project, open and maintain in dollars a special deposit account in Reserve Bank of Vanuatu on terms and conditions satisfactory to the Association. Deposits into, and payments out of, the Special Account shall be made in accordance with the provisions of Schedule 4 to this Agreement.


Section 2.03. The Closing Date shall be June 30, 1995 or such later date as the Association shall establish. The Association shall promptly notify the Borrower of such later date.


Section 2.04. (a) The Borrower shall pay to the Association a commitment charge on the principal amount of the Credit not withdrawn from time to time at a rate to be set by the Association as of June 30 of each year, but not to exceed the rate of one-half of one percent (1/2 of 1%) per annum.


(b) The commitment charge shall accrue:

(c) The commitment charge shall be paid:

Section 2.05. The Borrower shall pay to the Association a service charge at the rate of three-fourths of one percent (3/4 of 1%) per annum on the principal amount of the Credit withdrawn and outstanding from time to time.


Section 2.06. Commitment charges and service charges shall be payable semi-annually on May 1 and November 1 in each year.


Section 2.07 (a) Subject to paragraphs (b) and (c) below, the Borrower shall repay the principal amount of the Credit in semi-annual instalments payable on each May 1 and November 1 commencing November 1, 2001 and ending May 1, 2031. Each instalment to and including the instalment payable on May 1, 2011 shall be one percent (1%) of such principal amount, and each instalment thereafter shall be two percent (2%) of such principal amount.


(b) Whenever:

(c) If, at any time after a modification of terms pursuant to paragraph (b) above, the Association determines that the Borrower's economic condition has deteriorated significantly, the Association may, if so requested by the Borrower, further modify the terms of repayment to conform to the schedule of instalments as provided in paragraph (a) above.


Section 2.08. The currency of the United States of America is hereby specified for the purposes of Section 4.02 of the General Conditions.


ARTICLE III


Execution of the Project


Section 3.01. (a) The Borrower declares its commitment to the objectives of the Project as set forth in Schedule 2 to this Agreement, and, to this end:


(i) shall carry out, or cause to be carried out, Parts A, C, D and E of the Project with due diligence and efficiency and in conformity with appropriate administrative and financial practices and shall provide, promptly as needed, the funds, facilities, services and other resources required for such Parts of the Project; and

(ii) without limitation or restriction upon any of its other obligations under the Development Credit Agreement, the Borrower shall cause NHC to carry out Part B of the Project and to perform all its obligations set forth in the Project Agreement, shall take or cause to be taken all action, including the provision of funds, facilities, services and other resources, necessary or appropriate to enable NHC to perform such obligations, and shall not take or permit to be taken any action which would prevent or interfere with such performance.


Section 3.02. Except as the Association shall otherwise agree, procurement of the goods, works and consultants' services required for Parts B, C, D and E of the Project and to be financed out of the proceeds of the Credit shall be governed by the provisions of Schedule 3 to this Agreement.


Section 3.03. The Borrower and the Association hereby agree that the obligations set forth in Section 9.03, 9.04, 9.05, 0.06, 9.07 and 9.08 of the General Conditions (relating to insurance, use of goods and services, plans and schedules, records and reports, maintenance and land acquisition, respectively) in respect of Part B of the Project shall be carried out by NHC pursuant to Section 2.03 of the Project Agreement.


Section 3.04. The Borrower shall establish, or cause to be established, a housing refinance facility to refinance through Participating Intermediaries mortgages for the purchase of lots developed by NHC and for the construction of homes by eligible beneficiaries in Port Vila and Luganville, which facility shall be satisfactory to the Association and shall include, inter alia, those provisions set out in Schedule 5 to this Agreement.


Section 3.05. The Borrower shall enter into a Participation Agreement with each Participating Intermediary on terms and conditions satisfactory to the Association, including those set out in Schedule 5 to this Agreement.


Section 3.06. The Borrower shall each year until completion of the Project, beginning June 30, 1992.


(a) review jointly with the Association, the operation and performance of the HRF, including compliance with the relevant HRF guidelines, and furnish to the Association a copy of the results of such review as soon as available; and

(b) review the achievement of the following performance targets of NHC; deposits shall have been received for at least 75% of all lots prior to start of construction, an average margin on direct development costs of at least 25% shall have been achieved by NHC on lots sold during the year, at least 95% of all leases shall have been converted into mortgages at the end of the original lease term, and arrears on lease payment collections shall be no more than 5%.

ARTICLE IV


Financial Covenants


Section 4.01. (a) The Borrower shall maintain or cause to be maintained records and accounts adequate to reflect in accordance with sound accounting practices the operations, resources and expenditure in respect of Parts A, C, D and E of the Projects of the departments or agencies of the Borrower responsible for carrying out the Project of any part thereof.


(b) The Borrower shall:


(i) have the records and accounts referred to in paragraph (a) of this Section including those for the Special Account for each fiscal year audited, in accordance with appropriate auditing principles consistently applied, by independent auditors acceptable to the Association;

(ii) furnish to the Association, as soon as available, but in any case not later than nine months after the end of each such year, a certified copy of the report of such audit by said auditors, of such scope and in such detail as the Association shall have reasonably requested; and

(iii) furnish to the Association such other information concerning said records, accounts and the audit thereof as the Association shall from time to time reasonably request.

(c) For all expenditures with respect to which withdrawals from the Credit Account for Parts A, C, D and E of the Project were made on the basis of statements of expenditure, the Borrower shall:

ARTICLE V


Remedies of the Association


Section 5.01. Pursuant to Section 6.02(h) of the General Conditions, the following additional events are specified:


(a) NHC shall have failed to perform any of its obligations under the Project Agreement.

(b) The Policy Statement shall have been amended, suspended, abrogated, repealed or waived so as to affect materially and adversely the ability of NHC to perform any of its obligations under the Project Agreement.

(c) As a result of events which have occurred after the date of the Development Credit Agreement, an extraordinary situation shall have arisen which shall make it improbable that NHC will be able to perform its obligations under the Project Agreement.

(d) The National Housing Corporation Act shall have been amended, suspended, abrogated, repealed or waived so as to affect materially and adversely the ability of NHC to perform any of its obligations under the Project Agreement.

(e) The Borrower or any other authority having jurisdiction shall have taken any action for the dissolution or disestablishment of NHC or for the suspension of its operations.

(f) (i) Subject to subparagraph (ii) of this paragraph:

(A) The right of the Borrower to withdraw the proceeds of any loan or grant made to the Borrower for the financing of the Project shall have been suspended, cancelled or terminated in whole or in part, pursuant to the terms thereof, or


(B) Any such loan shall have become due and payable prior to the agreed maturity thereof.


(ii) Subparagraph (i) of this paragraph shall not apply if the Borrower established to the satisfaction of the Association that:

(B) Adequate funds for the Project are available to the Borrower from other sources on terms and conditions consistent with the obligations of the Borrower under this Agreement.


Section 5.02 Pursuant to Section 7.01(d) of the General Conditions, the following additional events are specified:


(a) any event specified in paragraph (a) of Section 5.01 of this Agreement shall occur and shall continue for a period of sixty days after notice thereof shall have been given by the Association to the Borrower; and

(b) any event specified in paragraph (b), (c), (d), (e) and (f)(i) of Section 5.01 of this Agreement shall occur.

ARTICLE VI


Effective Date; Termination


Section 6.01. The following events are specified as additional conditions to the effectiveness of the Development Credit Agreement within the meaning of Section 12.01(b) of the General Conditions:


(a) at least one Participation Agreement shall have been signed; and

(b) all arrangements to carry out Schedule 2, Part D.1 shall have been completed, including obtaining a lease for an alternative site which permits such site to be used for waste disposal.

Section 6.02. The following is specified as an additional matter, within the meaning of Section 12.02(b) of the General Conditions, to be included in the opinion or opinions to be furnished to the Association, namely, that the Project Agreement has been duly authorized or ratified by NHC, and is legally binding upon NHC in accordance with its terms.


Section 6.03. The date ninety (90) days after the date of this Agreement is hereby specified for the purposes of Section 12.04 of the General Conditions.


ARTICLE VII


Representative of the Borrower; Addresses


Section 7.01. The Minister of Finance of the Borrower is designated as representative of the Borrower for the purposes of Section 11.03 of the General Conditions.


Section 7.02. The following addresses are specified for the purposes of Section 11.01 of the General Conditions:


For the Borrower:


Minister of Finance
Ministry of Finance
Private Mail Bag 058
Port Vila
Vanuatu

Telex:


1040 VANGOV NH


For the Association:


International Development Association
1818 H Street, N.W.
Washington, D.C. 20433
United States of America


Cable Address: Telex:


INDEVAS 248423 (RCA)
Washington, D.C. 82987 (FTCC)
64145 (WUI) or
197688 (TRT)


IN WITNESS WHEREOF, the parties hereto, acting through their duly authorized representatives, have caused this Agreement to be signed in their respective names, as of the day and year first above written.


REPUBLIC OF VANUATU


BY


AUTHORIZED REPRESENTATIVE


INTERNATIONAL DEVELOPMENT ASSOCIATION


BY


AUTHORIZED REPRESENTATIVE


_____________________________


SCHEDULE 1


Withdrawal of the Proceeds of the Credit


  1. The table below sets forth the Categories of items to be financed out of the proceeds of the Credit, the allocation of the amounts of the Credit to each Category and the percentage of expenditures for items so to be financed in each Category:

Amount of the
Credit Allocated % of
(Expressed in Expenditures
Category SDR Equivalent) to be Financed


(1) Subloans 820,000 75% of eligible
mortgage loans


(2) Civil works 630,000 90%


(3) Goods 360,000 100% of foreign

expenditures; 100% of local expenditures (ex-factory cost); 70% of local expenditures for other items procured locally.


(4) Consulting services, 390,000 100%
technical assistance,
and training.


(5) Unallocated 300,000
_________
TOTAL 2,500,000
========


2. For the purposes of this Schedule:


(a) the term "foreign expenditures" means expenditures in the currency of any country other than that of the Borrower for goods or services supplied from the territory of any country other than that of the Borrower; and


(b) the term "local expenditures" means expenditures in the currency of the Borrower or for goods or services supplied from the territory of the Borrower.


  1. Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be made in respect of payments made for expenditures prior to the date of this Agreement except that withdrawals, in an aggregate amount not to exceed SDR 250,000 may be made in respect of Categories (2), (3) and (4) on account of payments made for expenditures before that date but after July 15, 1990.

SCHEDULE 2


Description of the Project


The objectives of the Project are to provide affordable housing to middle and lower income groups, improve sector policies to develop a market-based housing development and finance system and a sound institutional framework, and increase long-term finance from the private sector for housing for middle and lower income groups.


The Project consists of the following parts, subject to such modifications thereof as the Borrower and the Association may agree upon time to time to achieve such objectives:


Part A


Provision of financing for about 400 lower and middle income households through the Housing Refinance Facility channelled through Participating Intermediaries to partially finance through long-term mortgages the purchase of:


Provisions of financing for about 400 lower and middle income households through the Housing Refinance Facility channelled through Participating Intermediaries to partially finance through long-term mortgages the purchase of:


(1) serviced lots developed by NHC on two sites (one in Port Vila and one in Luganville), which lots include piped municipal water supply, gravel roads, drainage and onsite sanitary systems; and


(2) houses to be constructed at such sites.


Part B


Strengthening NHC by training NHC staff and by providing technical assistance for planning and engineering design for development sites, and development of internal NHC systems and procedures, including provision of a new office building, vehicles and equipment.


Part C


Off-site improvements to the existing water supply facilities and network in Port Vila and Luganville, consisting of main extensions and replacements to ensure adequate supply of water to the new NHC lots.


Part D


1. Relocating the existing Port Vila rubbish dump.


  1. Strengthening solid waste management by providing equipment and vehicles and operational assistance and training.

Part E


Strengthening the capacities of the Borrower to formulate sound and appropriate housing and urban development policies, through the provision of technical assistance.


* * *


The Project is expected to be completed by December 31, 1994.


SCHEDULE 3


Procurement and Consultants' Services


Section I Procurement of Goods and Works


Part A International Competitive Bidding


Except as provided in Part C hereof, goods shall be procured under contracts awarded in accordance with procedures consistent with those set forth in Sections I and II of the "Guidelines for Procurement under IBRD Loans and IDA Credits" published by the Bank in May 1985 (the Guidelines).


Part B Preference for Domestic Manufacturers


In the procurement of goods in accordance with the procedures described in Part A hereof, goods manufactured in Vanuatu may be granted a margin of preference in accordance with, and subject to, the provisions of paragraphs 2.55 and 2.56 of the Guidelines and paragraphs 1 through 4 of Appendix 2 thereto.


Part C Other Procurement Procedures


  1. Contracts for civil works may be awarded on the basis of competitive bidding, advertised locally, in accordance with procedures satisfactory to the Association.
  2. Goods estimated to cost the equivalent of $100,000 or less may be procured under contracts awarded on the basis of competitive bidding, advertised locally, in accordance with procedures satisfactory to the Association.
  3. Goods estimated to cost the equivalent of $50,000 or less per contract, up to an aggregate of $250,000 equivalent, may be procured under contracts awarded on the basis of comparison of price quotations obtained from at least three suppliers eligible under the Guidelines, in accordance with procedures acceptable to the Association.
  4. Installation of off-site water supply improvements up to an aggregate amount equivalent to $100,000 may be carried out through force account.

Part D Review by the Association of Procurement Decisions


1. Review of invitations to bid and of proposed awards and final contracts:


(a) With respect to each contract estimated to cost the equivalent of $150,000 or more, the procedures set forth in paragraphs 2 and 4 of Appendix 1 to the Guidelines shall apply. Where payments for such contract are to be made out of the Special Account, such procedures shall be modified to ensure that the two conformed copies of the contract required to be furnished to the Association pursuant to said paragraph 2(d) shall be furnished to the Association prior to the making of the first payment out of the Special Account in respect of such contract.


(b) With respect to each contract not governed by the preceding paragraph, the procedures set forth in paragraphs 3 and 4 of Appendix 1 to the Guidelines shall apply. Where payments for such contract are to be made out of the Special Account, such procedures shall be modified to ensure that the two conformed copies of the contract together with the other information required to be furnished to the Association pursuant to said paragraph 3 shall be furnished to the Association as part of the evidence to be furnished pursuant to paragraph 4 of Schedule 4 to this Agreement.


(c) The provisions of the preceding subparagraph (b) shall not apply to contracts on account of which the Association has authorized withdrawals on the basis of statements of expenditure.


  1. The figure of 15% is hereby specified for purposes of paragraph 4 of Appendix 1 to the Guidelines.

Section II - Employment of Consultants


In order to assist the Borrower in carrying out the Project, the Borrower shall employ consultants whose qualifications, experience and terms and conditions of employment shall be satisfactory to the Association. Such consultants shall be selected in accordance with principles and procedures satisfactory to the Association on the basis of the "Guidelines for the Use of Consultants by World Bank Borrowers and by the World Bank as Executing Agency" published by the Bank in August 1981.


SCHEDULE 4


Special Account


1. For the purposes of this Schedule:


(a) the term "eligible Categories" means Categories (1), (2), (3) and (4) set forth in the table in paragraph 1 of Schedule 1 to this Agreement;


(b) the term "eligible expenditures" means expenditures in respect of the reasonable cost of goods and services required for the Project and to be financed out of the proceeds of the Credit allocated from time to time to the eligible Categories in accordance with the provisions of Schedule 1 to this Agreement; and


(c) the term "Authorized Allocation" means an amount equivalent t $250,000 to be withdrawn from the Credit Account and deposited in the Special Account pursuant to paragraph 3(a) of this Schedule.


  1. Payments out of the Special Account shall be made exclusively for eligible expenditures in accordance with the provisions of this Schedule.
  2. After the Association has received evidence satisfactory to it that the Special Account has been duly opened, withdrawals of the Authorized Allocation and subsequent withdrawals to replenish the Special Account shall be made as follows:

(a) For withdrawals of the Authorized Allocation, the Borrower shall furnish to the Association a request or requests for a deposit or deposits which do not exceed the aggregate amount of the Authorized Allocation. On the basis of such request or requests, the Association shall, on behalf of the Borrower, withdraw from the Credit Account and deposit in the Special Account such amount or amounts as the Borrower have requested.


(b) (i) For the replenishment of the Special Account, the Borrower shall furnish to the association requests for the deposits into the Special Account at such intervals as the Association shall specify.


(ii) Prior to or at the time of each such request, the Borrower shall furnish to the Association the documents and other evidence required pursuant to paragraph 4 of this Schedule for the payment or payments in respect of which replenishment is requested. On the basis of each such request, the Association shall, on behalf of the Borrower, withdraw from the Credit Account and deposit into the Special Account such amount as the Borrower shall have requested and as shall have been shown by said documents and other evidence to have been paid out of the Special Account for eligible expenditures.


All such deposits shall be withdrawn by the Association from the Credit Account under the respective eligible Categories, and in the respective equivalent amounts, as shall have been justified by said documents and other evidence.


  1. For each payment made by the Borrower out of the Special Account, the Borrower shall, at such time as the Association shall reasonably request, furnish to the Association such documents and other evidence showing that such payment was made exclusively for eligible expenditures.
  2. Notwithstanding the provisions of paragraph 3 of this Schedule, the Association shall not be required to make further deposits into the Special Account:

(a) if, any time the Association shall have determined that all further withdrawals should be made by the Borrower directly from the Credit Account in accordance with the provisions of Article V of the General Conditions and paragraph (a) of Section 2.02 of this Agreement; or


(b) once the total unwithdrawn amount of the Credit allocated to the eligible Categories, less the amount of any outstanding special commitment entered into by the Association pursuant to Section 5.02 of the General Conditions with respect to the Project, shall equal the equivalent of twice the amount of the Authorized Allocation.


Thereafter, withdrawal from the Credit Account of the remaining unwithdrawn amount of the Credit allocated to the eligible Categories shall follow such procedures as the Association shall specify by notice to the Borrower. Such further withdrawals shall be made only after and to the extent that the Association shall have been satisfied that all such amounts remaining on deposit in the Special Account as of the date of such notice will be utilized in making payments for eligible expenditures.


  1. (a) If the Association shall have determined at any time that any payment out of the Special Account:

(b) If the Association shall have determined at any time that any amount outstanding in the Special Account will not be required to cover further payments for eligible expenditures, the Borrower shall, promptly upon notice from the Association, refund to the Association such outstanding amount.


(c) The Borrower may, upon notice to the Association, refund to the Association all or any portion of the funds on deposit in the Special Account.


(d) Refunds to the Association made pursuant to paragraphs 6(a), (b) and (c) of this Schedule shall be credited to the Credit Account for subsequent withdrawal or for cancellation in accordance with the relevant provisions of this Agreement, including the General Conditions.


SCHEDULE 5


Guidelines for the Housing Rediscount Facility


  1. HRF is to assist eligible beneficiaries in obtaining credit to purchase serviced lots and to build their own dwelling.

2. The Borrower will bear all foreign exchange risks associated with the Credit.


  1. The Credit will be channelled through the Reserve Bank of Vanuatu (RBV) at the prevailing RBV Secure Lending Rate (SLR) less 50 basis points to cover RBV's administrative costs.
  2. Participating Intermediaries shall lend to the eligible beneficiaries at a variable rate (related to the SLR) at market rates with a spread expected to be about 400 – 500 basis points. The Participating Intermediaries shall bear the credit risk.

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