Indian Railways on 11 March 2015 inked an MoU with Life Insurance Corporation (LIC) to raise Rs 1.5 lakh crore for financing the development of its various commercially viable infrastructure projects.
The MoU was signed by Financial Commissioner (Railways) Rajalakshmi Ravikumar and LIC Chairman SK Roy in presence of Union Finance Minister Arun Jaitley and the Minister of Railways Suresh Prabhu.
Under the MoU
- State-run insurance giant LIC will provide a Financial Assistance of Rs 1.5 lakh crore to Indian Railways for developing infrastructure.
- From the Financial Year 2015-16 the financial assistance will be made available by LIC for over a period of 5 years as part of its commercial decision.
- The investment will be done in the form of bonds issued by various railway entities such as Indian Railways Finance Corporation (IRFC).
- There will be a 5 year moratorium in interest and loan repayment. The rate will be linked to 10-year benchmark plus 10 basis points.
With the Financial Assistance from LIC, the cash-strapped Railways will be able to augment its resources for speedier execution of projects.