Indian Railway Finance Corporation (IRFC) aims to become financer for all infrastructure projects apart from the Railways. It also plans to enlarge its bouquet of borrower institutions by including World Bank, New Development Bank, National Bank for Financing Infrastructure and Development (NBFID) and various European banks.

“We want to move beyond our comfort zone,” Amitabh Banerjee, Chairman and Managing Director, IRFC told BusinessLine. “Now our effort would be to provide funds for projects that have a forward or backward linkage with the Railways,” he said. Such projects could include road & port connectivity to a railway station, warehousing, metros and multi-mode logistic parks. “I am widening my mandate and augmenting capacity,” he said.

This quasi sovereign entity is at present the dedicated market borrowing arm of Indian Railways. Earlier (1986-2014-15), it used to lend for rolling stock (wagons, coaches, locomotives etc), but post 2015-16, it has been providing finance for various infrastructure projects of the Railways such as gauge conversion and station upgradatio.

To facilitate expansion in terms of financing, the board recently approved amendments in the Objects Clause of the Memorandum of Association. Post approval by the Railway Ministry, the mandate for the company will include “to finance maintenance of Railway assets and/or infrastructure projects of any kind”, and “to promote and / or incorporate the Debt Fund / Venture Capital Fund / Alternate Investment Fund / any other fund for funding Railway Assets and/or infrastructure projects of any kind.” These amendments will also guide the company in participating in PM Gati Shakti Program.

Portfolio and interest rate

For the current fiscal, the company has a mandate to raise Rs 66,500 crore from the Railways. Banerjee said it could go up or even less than that depending upon the issuance of indents by the Railways. “In order to keep the cost of borrowing down, we have a flexible policy. We have sanctioned loans from banks, but if we find the cost is lower through other means such as issuance of bonds or an external source, we will go for that,” he said, adding the average weighted cost of funds had come down from 6.51 per cent to 6.42 per cent in FY 22.

Further, he said, the company would go for a judicious mix of instruments in the current fiscal too. During FY 22, the company raised around 45 per cent of its resources through issuance of bonds, 32-33 per cent through Rupee Term Loans and 15-16 per cent through External Commercial Borrowings (ECB)

However, he admitted that the current fiscal is challenging in terms of keeping the cost of funds low. “I have been able to withstand headwinds. Whether, it will be done in the current fiscal, will be challenging,” he said.

New sources

IRFC is in talks with World Bank, New Development Bank, National Bank for Financing Infrastructure and Development (NBFID) and various European banks for resources during the current fiscal. Banerjee expects some proposals to materialise. He is also optimistic of getting funds domestically at cheaper cost as IRFC has an ‘AAA’ (with stable outlook) rating from all three key domestic rating agencies (CRISIL, ICRA and CARE).

The company ended fiscal FY 22 with a net profit of Rs 6,090 crore for FY 2021-22, as against Rs 4,416 crore reported in the previous FY 2020-21.