LIC plans entering bond forward rate agreement market in FY25: Sources

State-owned insurer's entry expected to increase demand for instruments typically used to lock interest rates for a future date

State-owned Life Insurance Corporation of India (LIC) will enter the bond forward rate agreement (FRA) market by the end of FY25, seeking to ease risks in the non-participatory (non-par) segment, according to two sources.

 

FRAs are contracts between banks and insurance companies that enable insurers to lock interest rates for a future date and get protection from market volatility. By entering such agreements, insurers can offer guaranteed returns to policyholders.

 

“We have not undertaken trades yet in bond FRA, we are still in the process. But, we should mostly be ready and