LIC has decided to lend Rs.5000 crores for the Railways projects at a cost of 30 bps over the 10-year government bonds. This funding will be guaranteed by the Finance Ministry. The funds will be available for 30 years as per an MoU, said a release.
The Indian Railway Finance Corporation 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.
The Ministry of Finance has approved government guarantee of Rs.5,000 crore in the current financial year for IRFC bonds to be subscribed by LIC. The guarantee fee for the aforesaid amount has also been waived by the Ministry.
The Ministry of Railways had entered into an 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, it added.