LIC to set up credit enhancement fund shortly

LIC will “shortly” announce setting up of a credit enhancement fund to provide guarantees for infrastructure sector companies to help them access funds from domestic and overseas markets at lower cost.

“We expect LIC to announce it shortly,” Secretary in the Department of Economic Affairs Shaktikanta Das said.

When asked about the impact of this move, he said if infrastructure sector companies “get a credit enhancement, they will be able to access funds from the market both domestic and overseas at lower cost because of the credit enhancement which they get.” The infrastructure companies, Das said will be able to leverage on this and get credit enhancement.

The fund would help in raising the credit rating of bonds floated by infrastructure companies and facilitate investment from long term investors.

The move assumes significance as infra firms are finding it difficult to raise adequate funds at competitive which are needed for projects with long gestation period.