LIC Presents the Cheque of Rs.2000 crore as the First Tranche of Funding Assistance to Railways
This handing over of cheque was done today at an impressive function at Rail Bhawan in the presence of Ministry of Railways Suresh Prabhakar Prabhu. The cheque was handed over by S B Mainak, MD/LIC to Rajiv Dutt, MD/IRFC.
On this occasion, Chairman Railway Board A K Mital, Financial Commissioner (Railways) & Chairman, IRFC S. Mookerjee; and other Board Members & other Railway and LIC officials were among those present.
It may be recalled that just within fifteen days of presenting the Railway Budget 2015-16, an important commitment of Budget announcement was fulfilled on 11.03.2015 when Railways and LIC signed an MoU for the highest ever funding of Rs. 1.5 lakh crore from LIC to Railways.
Addressing the gathering, Minister for Railways Suresh Prabhakar Prabhu, pointed out that finding resources for investment in capacity enhancement projects was a major challenge for Railways. Without investment, it would not be possible to decongest the network, increase traffic output and generate adequate internal resources.
He said that without the fresh investment, the Railways would have gone further down and down and it would not have succeeded in breaking the vicious cycle. The Railway budget 2015-16 had, therefore, envisaged a new source of funds in the form of Institutional Finance.
It was a big achievement that within a few days of presenting the budget, the Ministry of Railways signed a Memorandum of Understanding with LIC for funding assistance of Rs.1.5 lakh crore for financing Railway projects over a period of 5 years. As LIC funding will be of 30 year tenor, it matches the Railways’ requirement of long term funds for investment in projects.
LIC funds will carry low interest rates tied to Government security, and the cost of funds are expected to come down further over a period of time.
Prabhakar said that an important beginning has been made today with the release of first cheque of LIC funds. It is now for the Railways to match up to the challenge of utilizing the funds in a productive and appropriate manner for realizing maximum benefit.
He said that these funds will not only meet the requirement for the new railway projects but will also be utilised for those ongoing projects which will bring quick benefit to the railway system. He said that this arrangement of funds from LIC will be beneficial for both the organizations.
Referring to Railway PSU IRFC, Suresh Prabhu said that IRFC has now emerged as an important vehicle for channelizing investment for Railways.
