Indian Railways on 11 March 2015 signed Memorandum of Understanding (MoU) with Life Insurance Corporation of India (LIC) to augment its resources for speedier execution of projects. The MoU was signed by Rajalakshmi Ravikumar, Financial Commissioner (Railways) and SK Roy, Chairman of LIC.
Under this MoU, LIC will make available a Financial Assistance of 150000 crore rupees to the Indian Railways for implementing Railway projects over the next five years. The Financial Assistance will be available from the Financial Year 2015-16.
LIC will invest in bonds issued by various railway entities such as Indian Railways Finance Corporation. There will be a 5 year moratorium in interest and loan repayment. The bonds will have a tenor of 30 years and will be disbursed over the next five years.
In his Budget Speech 2015-16, Union Railways Minister Suresh Prabhu had announced his intention of meeting a part of the total Plan Budget of 100011 crore rupees through extra budgetary resources, such as market borrowings by tapping low cost long term funds.
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