Comments
Indian Railway Finance Corporation’s (IRFC) Rs 5,000-crore bond issuance to LIC will have a government guarantee, the Finance Ministry said today. “The Ministry of Finance has approved the Government guarantee of Rs 5,000 crore in the current financial year for the IRFC bonds to be subscribed by the Life Insurance Corporation (LIC),” an official statement said.
The move will further ease the flow of borrowed funds for the Railways Ministry to undertake projects, it added. On March 11, 2015, the Railways Ministry had entered into a memorandum of understanding (MoU) with LIC under which the state-owned life insurer has to provide financial assistance of Rs 1.50 lakh crore for identified projects between 2015 to 2019.
Accordingly, IRFC has been raising funds from LIC by issue of bonds having a tenor of 30 years and remitting the funds to the Railways Ministry for projects. However due to exposure limit constraints in accordance with IRDA guidelines, LIC has not been able to subscribe to IRFC bonds beyond a certain limit, the statement said.
“In order to overcome the exposure limit constraint, the Ministry of Finance has approved the Government Guarantee so that LIC can subscribe to the Government guaranteed bonds without any limit as per IRDA guidelines,” it added. LIC funds are available to the Railways Ministry at 30 bps above the 10-year benchmark yield. The guarantee fee for the amount has also been waived by the Finance Ministry, the statement added.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.