If approved, it would be the first time the World Bank has agreed to a such a loan in rupees.
The bank says the money would be invested in health, water, energy and irrigation projects.
World Bank approval
The loan represents some 60% of total costs for the development project which come to nearly $6bn.
The money will partly be spent on better healthcare The idea is that the loan would be sanctioned in dollars, but would be handed over in rupees.
All repayments would be in rupees too.
This would prevent any changes in the amount to be repaid caused by fluctuating exchange rates.
The loan still has to get the approval of the World Bank, India's central government and the Maharashtra state government.
The loan arrangement was discussed at a meeting between World Bank Country Director for India, Isabel Guerrero, and Maharashtra state government officials on Thursday.
In the last few months, the rupee has appreciated sharply against the dollar from 45 rupees to a dollar to 40 rupees to a dollar.
One of the projects Maharashtra wants help with is the Mumbai Metro project, projected to cost $2.5bn. It is hoping to receive loans of $1.5bn.
The project would connect south Mumbai (Bombay) to the suburbs.
Other projects include rural and urban water supplies, power transmission, technical support for a "vision Mumbai" plan and a possible Public Private Partnership (PPP) in irrigation.
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Ah... i have personally seen the plans and the architectural models for this plan, and its good, very good. I'm convined that this loan may be the thing the \city needs to finally kick start the modernistation process. The metro is pretty awesome from what it seems
Only worry is that someone may get their hands ojn it before it can be put to use
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