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German development bank KfW approved a € 545m loan to the Union Ministry of Finance to finance Bombay‘s Metro Line 4 and Line 4A, to extend the rapid transit system of the world’s largest metro rail network.

The pact was signed on Friday after a year of negotiations with the agency. This is KfW’s largest line of credit to an infrastructure project in India.

The credit envelope of the German Federal Ministry for Economic Cooperation and Development (BMZ) -KfW consists of a development loan of 345 million euros and a promotional loan of 200 million euros. The interest rate will vary from 0.07% to 0.82% according to the different tranches. These will be the lowest interest rates on any loan given to an infrastructure project in India by a bilateral or multilateral funding agency.

Metro line 4 from Wadala to Kasarvadavali and line 4A from Kasarvadavali to Gaimukh will connect the island city to the northern suburb of Thane. This is part of the Mumbai Metropolitan Area Development Authority’s plan to build a 337 km metro rail network. At present, 118 km of metro lines are in various stages of construction, while 11 km are operational.

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