IRFC looks beyond Indian Railways, weighs opportunity to finance infra projects having linkages with Railways

New Delhi: Indian Railway Finance Corporation, a financial institution under the ministry of railways, is looking to fund public and private infrastructure projects to expand its business that has been focused on mobilizing and funding projects of the Indian Railways.

The state-owned non-bank financial institution (NBFC), which has now been awarded the Navratna status, is looking at expanding into sectors with strong forward and backward linkages to railways, such as power generation and transmission, mining, fuel, coal, warehousing, telecom, and hospitality, Manoj Kumar Dubey, chief executive and CMD of IRFC said.

IRFC is also exploring opportunities to fund rolling stock requirements for Indian Railways customers, container train operators, renewable energy needs of Indian Railways, Metro Rail projects, port rail connectivity, and PPP projects sanctioned by Indian Railways, he added.

The financing institution has already secured three orders in the current quarter for funds totalling ₹11,500 crore outside Indian Railways for meeting the requirements of three NTPC projects including a wagon procurement programme by the PSU. 

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Dubey said more opportunities for funding such projects would arise soon and IRFC will participate in all such RFPs (request for proposal) with competitive bids based on its attractive loan offerings, buily upon a low-cost fund mobilisation strategy.

“The Railways is not borrowing from the market, an exercise that we used to do for the national transporter till a few years back. This has made is to look for opportunities beyond the Railways and through the new financing initiatives we have been able to raise both our margins as this remained at just around 40 bps for providing project funds to the Railways,” Dubey said.

In its first set of project financing orders outside the Railways, IRFC emerged as the lowest bidder to finance ₹3,167 crore for the development of the Banhardih Coal Block in Jharkhand bring executed by Patratu Vidyut Utpadan Nigam Ltd (PVUNL), a joint venture where NTPC holds 74% equity stake and Jharkhand Bijli Vitran Nigam Ltd 26%. 

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Besides, the NBFC has also signed a ₹700 crore lease agreement with NTPC to finance 20 Bogie Open Bottom Rapid (BOBR) rakes and another mega ₹7,500 crore loan agreement with NTPC Renewable Energy Ltd (NTPC REL) to finance a Rupee Term Loan (RTL) for renewable energy projects. All the new funding deals have been struck in ongoing last quarter of FY25.

“Our low-cost model allows us to provide funding at attractive rates to the industry. Besides, we are among the three entities including REC and PFC who can issue 54EC bonds or capital gains bond that allows investors to claim exemption on capital gains. Also, zero coupon bonds allow us to mobilise low-cost fund. With almost zero NPA, it gives us the leverage to offering attractive financing options to projects,” Dubey said.

IRFC is looking at financing a host of port, roadways, waterways, power and telecommunication projects in FY26 that will allow it to expand its asset base. With a revenue of over ₹26,600 crore and a profit after tax exceeding ₹6,400 crore as of 31 March 2024, IRFC is now the third-largest government NBFC in India. 

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It has played a role in funding nearly 80% of Indian Railways’ rolling stock and was the first CPSE to issue a 30-year tenor bond in overseas markets. As of 31 December, 2024, IRFC has a market capitalization of over ₹2 trillion, an asset under management (AUM) of ₹4.61 trillion, a net worth of around ₹52,000 crore, and a balance sheet size of more than ₹4.81 trillion.

“Receiving Navratna status is a reflection of IRFC’s financial strength and its commitment to supporting India’s railway infrastructure. This recognition further motivates us to expand our capabilities and contribute more meaningfully to the nation’s growth,” said Dubey.

IRFC was registered as a Public Financial Institution under the Companies Act in 1993, an NBFC under RBI in 1998, and later as an NBFC-Infrastructure Finance Company (NBFC-IFC) in 2010. In March 2018, it was granted Mini-Ratna Category-I status. The company was listed on stock exchanges in January 2021 at an IPO price of ₹26 a share.

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