The Life Insurance Corporation of India (LIC) is in discussions with the Reserve Bank of India (RBI) to introduce ultra-long-term bonds with tenures of 50 years and 100 years. This move aims to provide LIC with stable, long-term investment options to support its long-term contractual commitments.
LIC Seeks Longer-Term Bonds for Stability
LIC’s Chairman and Managing Director, Siddhartha Mohanty, revealed this during the 25th Global Conference of Actuaries held in Mumbai. He explained that while RBI currently issues bonds with maturities ranging from 20 to 40 years, LIC is advocating for even longer tenures to better align with its long-term financial obligations.
“We have been discussing this with the RBI. Normally, they issue bonds for 20-30 years, and recently they have also issued 40-year bonds. We are hoping to see the introduction of 50-year and even 100-year bonds,” said Mohanty. He further added that LIC officials are regularly engaging with RBI on this matter, and the central bank is considering the proposal.
Why 50-Year and 100-Year Bonds?
As a life insurance provider, LIC needs long-term investment instruments to match its policyholder obligations, which often span multiple decades. The introduction of ultra-long-term bonds would help the insurer maintain financial stability and ensure smooth payouts for policyholders in the future.
RBI’s Consideration of Long-Term Bonds
RBI has previously issued bonds with a 40-year tenure, but 50-year and 100-year bonds would be a first in India’s financial market. Such bonds are commonly used in global markets, particularly by pension funds and insurers, to secure predictable long-term returns.
If RBI approves these ultra-long-term bonds, it could mark a significant shift in India’s bond market, benefiting not only LIC but also other institutional investors looking for stable, long-duration investment options.
