LIC Signed USD 1 Billion FRAs with JPMorgan & BoA to Hedge Against Interest Rate Risks

Current Context: On July 28, 2025, LIC signed USD 1 billion worth of Forward Rate Agreements (FRAs) with JPMorgan Chase & Co. and Bank of America Corp. to hedge against interest rate volatility.

• These deals, executed over two months, accounted for 38% of India’s FRA volumes since May 2025, marking LIC's growing influence in the bond derivatives space.
• With an asset base of USD 630 billion, LIC aimed to lock in future bond yields and protect income as rates fluctuate.
• The move follows a ₹46,000 crore dip in LIC’s equity portfolio between June and July 2025, prompting a shift toward safer financial instruments.
• The announcement spurred demand for long-term bonds, leading to record bid-to-cover ratios in recent government auctions.

This strategic risk management signals a broader trend of institutional hedging in India's financial landscape.

Question:

Q.1 On July 28, 2025, which global banks did LIC sign USD 1 billion worth of Forward Rate Agreements (FRAs) with?
a) Goldman Sachs and Morgan Stanley
b) HSBC and Citi Bank
c) Barclays and Deutsche Bank
d) JPMorgan Chase & Co. and Bank of America Corp.

Answer: d) LIC entered into FRA deals with JPMorgan and Bank of America to hedge against interest rate volatility.