Japan Bank for International Cooperation (JBIC) and ICICI Bank, Ltd. today signed an untied loan agreement of the yen equivalent of $200 million.

The loan is co-financed by private financial institutions, Sumitomo Mitsui Banking Corporation (agent bank), The Bank of Tokyo-Mitsubishi UFJ Ltd., Mizuho Corporate Bank Ltd., and the Tokyo branches of The Hongkong and Shanghai Banking Corporation and Société Générale, with JBIC providing a guarantee for their co-financing portions.

This loan is aimed at providing finance through ICICI Bank to prospective ''clean development mechanism'' CDM projects in which Japanese companies show an interest with regard to purchasing emissions-reduction credits and obtain a preferred negotiation status from such credits.

The loan is expected to increase the opportunities for Japanese companies to purchase emissions reduction credits and thereby help Japan achieve its ''green house gas'' (GHG) emissions reduction target under the Kyoto Protocol.

This would also lead to restraining GHG emissions in a rapidly growing India, which would contribute toward the prevention of global warming.

JBIC and ICICI Bank signed a memorandum of understanding for cooperation on CDM in May 2006, which brought about close coordination and discussion between the two banks that culminated in the signing of this loan agreement today.

To achieve Japan''s GHG emissions reduction target under the Kyoto Protocol (6 per cent reduction from the 1990 levels), it is crucial for Japan to utilise the Kyoto mechanisms, including the CDM, in addition to making domestic efforts to reduce emissions with various measures.

The "Plan to Achieve the Target under the Kyoto Protocol" adopted in the cabinet decision on 28 April, 2005, and revised on 11 July, 2006, noted the importance of acquiring emissions reduction credits through the Kyoto mechanisms and effectively making use of official financing (such as JBIC''s international financial operations).

In India as well sustaining development at between 7 per cent and 9 peer cent whilst caring for the environment is becoming an important policy agenda. As the government of India ratified the Kyoto Protocol in August 2002 and established the process of CDM at an early stage, India became the biggest country in terms of number of CDM projects approved by the UN CDM executive board, (267 projects out of total 757 as of 8 August, 2007).

With this background, the loan agreement was signed for the promotion of CDM in India so as to help achieve Japan''s GHG emissions reduction target under the Kyoto Protocol, and to contribute toward prevention of global warming.

CDM is one of the components of the Kyoto mechanisms that allows industrialised countries to undertake joint projects with developing countries and use the amount of emissions reduction credits (called ''certified emission reductions'' or CERs) generated from such projects to meet their own emissions reduction target.

The Kyoto mechanisms are economic arrangements set out in the Kyoto Protocol to enable industrialised countries and countries with economies in transition (EITs) to achieve their greenhouse gas (GHG) emissions reduction targets.

The mechanisms consist of the CDM, joint implementation (JI) and emissions trading.

Japan Bank for International Cooperation (JBIC) is the Japanese government''s financial institution that promotes Japan''s foreign economic policy through various financing facilities. JBIC took over the functions of the then Export-Import Bank of Japan (JEXIM) and Overseas Economic Cooperation Fund of Japan (OECF).