The two major deals were announced after Russian President Vladmir Putin today met with visiting Bangladeshi Prime Minister Sheikh Hasina for talks.
"Russia will issue a loan to Bangladesh worth one billion US dollars that will be used to buy Russian weapons and military hardware," Putin told journalists after the talks.
The deal is believed to be Bangladesh's biggest contract since independence.
The two sides inked 11 agreements, Itar-Tass reported.
Russia's gas giant Gazprom and Bangladeshi Petrobangla Corporation will also team up for a joint project, Putin said.
The project envisages a drilling of ten gas wells in Bangladesh. According to the Russian president, the project will make it possible to raise gas production in Bangladesh to 56 million cubic metres a day.
In addition Russia will grant a loan worth USD 500 million to Bangladesh for the construction of a nuclear power plant.
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The two countries also signed memorandums of understanding in various spheres, including anti-terrorism, justice, healthcare and education.
Hasina is on a three-day visit to Russia that ends tomorrow.
Ahead of the visit, Hasina had emphasised, "Russia has always been a true friend to Bangladesh," adding that, "this manifested itself in a particularly significant way during the war for independence in 1971 when the then Soviet Union came to our people's aid".
This is the first official visit of a Bangladesh Prime Minister to Moscow since Sheikh Mujibur Rahman's visit of the erstwhile Soviet Union in April, 1972, immediately after Bangladesh became independent.