Life Insurance Corporation (LIC) is all set to make an investment of Rs 1.5 lakh crore in the Indian Railways over the span of next five years.

LIC signed a Memorandum of Understanding with the Indian railways, which is at present struggling financially.

Finance Minister of India, Arun Jaitley said, during the signing of the MoU, "LIC has taken the task of supporting Indian Railways. It is a commercial decision. LIC will invest Rs 1.5 lakh crore over five years,"

The investment, amounting to Rs 30,000 crore yearly, would be made by way of bonds issued by Indian Railways Finance Corporation (IRFC) in order to raise funds for development of commercially feasible projects.

Chairman of LIC, S K Roy said the interest rate for the bonds to be subscribed by LIC is not decided yet and the deal with Indian railways is a commercial decision.

The Indian Rail minister Suresh Prabhakar Prabhu, at the time of announcing this year's rail budget, had said that railways will be spending Rs 8.5 lakh crore over a time period of five years in several areas that includes modernization, capacity expansion, safety and passenger amenities.