India’s largest government insurance company LIC has dealt with foreign banks. Two big firms of insurance company Wall Street JPMorgan Chase & Co. And has worked with Bank of America Corp. The company has dealt with these global banks to keep a bond forward rate of about $ 1 billion from these global banks to keep its liabilities safe. Let us understand what effect it can have on India’s bond market.
According to Bloomberg report, the Indian insurance company has signed a FRAS agreement with America banks, which is quite special in terms of bond market. In November last year, LIC announced an entry scheme in Bond Derivatives Market. Due to this, he also made many new deals this year. The company is further strengthening its presence in the bond market. LIC since May 2025 won a 38% stake in the Bond Derivatives Market with a $ 1 billion forward rate agreement (FRA) deals, which is part of a total $ 2.6 billion volume, as the data available on the website of Claring Corporation of India shows.
What is Fras?
In FRA, a basic insurance company deals with another bank or firm to buy bonds in a future. The bank from which the deal is taken, takes responsibility for the risk of bonds and in return, the deal collections some fixed premials from the company’s company. In this, long -term bonds are usually purchased to manage the risk. The impact of the bond agreement towards LIC can be seen on the Indian market. Because it is the country’s big insurance company. According to reports, with the arrival of LIC in this market, the demand for long -term bonds in the market has been increased.
Fras trend is increasing
Fras means the trend of bond forward rate deal is gradually increasing. This increase shows the increasing strength of India’s financial institutions. As Indian families are investing more in stock markets and other financial options, insurance companies like LIC are demanding various investment and risk management options. LIC manages assets worth about $ 630 billion. Forward rate agreements (Fras) are becoming particularly popular, as they help insurance companies to secure future interest rates and protect against losses due to reduction in interest rates.