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LIC – Indian Railways develop a bond of Rs 2,000 cr

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On the sidelines of MoU Life Insurance Corporation (LIC) will transfer a Cheque of Rs 2,000 crore to Indian Railway Finance Corporation (IRFC), the first tranche of its financial assistance for investment in capacity augmentation projects.

  • Railways had signed a MoU with LIC in March 2015 for financial assistance of Rs 1.5 lakh crore over the next five years for implementing railway projects.

LIC - Indian Railways develop a bond of Rs 2,000 croreIssuing of bonds
IRFC will issue bonds to be subscribed by LIC for the purpose. The bonds may yield between 8.75 and 8.85%.

  • The bond deal is seen more of a loan, but at a concessional rate, the permission for which has been taken from the Reserve Bank of India.
  • IRFC is likely to offer about Rs 17,200 crore worth of such bonds to LIC this financial year.

 Projects to be done
Shri Suresh Prabhu had mentioned about 77 projects involving doubling, new lines and gauge conversion to be undertaken in 24 over saturated corridors in the Rail Budget 2015-16.

  • The ministry intends to fast-track sanctioned works on 7,000 km of double/third/fourth lines and commission 1,200 km in 2015-16 at an investment of Rs 8,686 crore.
  • Pledges also include bullet trains and air-conditioned local trains for Mumbai.

Long term funds are essential to revamp the ailing network as banks alone cannot meet such huge requirements.