LIC launches Rs.5,000 cr rail infra financing

Life Insurance Corporation Of India (LIC)

Injecting a major booster to rail infra projects, LIC has recently agreed to finance rail infra projects to the tune of Rs.5,000 crore, said official sources, reiterating that railways projects will be funded by LIC at a cost of 30 bps over the 10-year government bonds. The funds will be available for 30 years as per signed MoU and will be guaranteed by the Finance Ministry. As a matter of fact, the Indian Railway Finance Corporation (IRFC) has been raising funds from LIC by issuing bonds having a tenor of 30 years and remitting the funds to the Ministry of Railways for construction of projects. In this connection, the Ministry of Finance has approved government guarantee of the aforesaid amount in the current financial year for IRFC bonds to be subscribed by LIC. The guarantee fee for the amount has also been waived by the Ministry. It may be recalled that the Ministry of Railways had entered into MoU with LIC on March 11, 2015, by which LIC has to provide a financial assistance of Rs.1.5 lakh crore for identified railway projects from 2015 to 2019, they added.