New Delhi, Dec 14 (IANS): India and Asian Development Bank (ADB) on Thursday signed a $60 million loan agreement to reduce floods and the riverbank erosion in Assam, the Finance Ministry said.

"The Tranche 2 loan is part of the $120 million multi-tranche financing facility for the Assam Integrated Flood and Riverbank Erosion Risk Management Investment Program approved by the ADB Board in October 2010," a Finance Ministry statement said.

The loan aims to continue financing riverbank protection works, renovation of flood embankments and community-based flood risk management activities in critically flood-prone areas along the Brahmaputra river in Assam.

While Finance Ministry Additional Secretary Sameer Kumar Khare signed the deal on behalf of the Central government, ADB's India Resident Mission Country Director Kenichi Yokoyama signed it on behalf of the multilateral lending agency.

"The programme is aimed at increasing the reliability and effectiveness of flood and riverbank erosion risk management systems in flood-prone areas of Assam, strengthening the disaster preparedness of the communities and developing institutional capacity and knowledge base for flood forecasting," Khare said.

"The Project 2 under the programme will fund a combination of structural and non-structural measures in the three subproject areas of Palasbari-Gumi, Kaziranga and Dibrugarh along the Brahmaputra river which include 20 km of riverbank protection works and upgrading of 13 km of flood embankments," Yokoyama said.

The loan will have a 20-year term, including a grace period of five years, an annual interest rate determined in accordance with ADB's lending facility based on the London Interbank Offered Rate, and a commitment charge of 0.15 per cent per year.