Indian Railway Finance Corporation Share Price

Indian Railways, the Ministry of Railways, and the Government of India own the Indian Railway Finance Corporation (IRFC). Across capital markets and other borrowings, it generates funds for expansion and operation. 

The ultimate focus of IRFC is to use market borrowings to cover the majority of the Indian Railways' 'Extra Budgetary Resources (EBR) requirements with the most competitive prices and conditions. The Company's primary activity is to borrow money from the financial markets to support the purchase or construction of assets that are subsequently leased to the Indian Railways. As of March 31, 2017, IRFC's total funding to the rail industry had surpassed INR 1.80 lakh crore and is on track to exceed INR 2.20 lakh crore by the end of March 2018. 

The funds will purchase rolling stock and improve infrastructure. It has so far sponsored the purchase of 8998 locomotives, 47910 passenger coaches, and 2,14,456 waggons, accounting for around 70% of Indian Railways' entire rolling equipment fleet. Since 2011-12, IRFC has been involved in financing railway projects and performance improvement initiatives. By 2019-20, the Company would also be responsible for financing Railway Projects via Institutional Finance to INR 1.50 lakh crore. 

Rail Vikas Nigam Limited (RVNL), RailTel, Konkan Railway Corporation Limited (KRCL), Pipavav Railway Corporation Limited (PRCL), and other organizations in the railway sector have received IRFC loans. IRFC's constant effort to broaden its lending portfolio in terms of instruments, markets, and investors has resulted in the Company meeting its aimed borrowings year after year through the issuance of both taxable and tax-free bonds, term loans from banks/financial institutions, and offshore borrowings, all at competitive market rates. 
 

OBJECTIVES

1. Generate funds via market borrowings from local and international capital markets at the most competitive rates and conditions, following the Ministry of Railways' yearly objectives.
2. To investigate the use of new and diversified vehicles for obtaining cash to lower the company's borrowing costs.
3. To provide finance promptly for the procurement of Rolling Stock assets for MOR's usage.
4. MOR's large scale and various operations enable it to efficiently deliver customised professional services at a competitive cost, one of its commercial advantages.
5. To look into the prospect of CPSEs and other organisations being able to fund the construction of rail infrastructure to ensure future development and profitability.
6. Use derivatives and other developing products wisely for risk mitigation at the right time and right price.

IRFC follows the above-mentioned objectives to make itself one of the country's leading financial service companies. To become a company that gathers funds from the capital market at a low cost to enhance railway plan finances and guarantee that the Corporation generates the most profit possible.

Company History

Indian Railway Finance Corporation Limited was established as a public limited company on December 12, 1986. On December 23, 1986, the RoC issued the Company a certificate of the beginning of the operation. The MCA categorised the Company as a Public Financial Institution under Section 4(A) of the Companies Act 1956 (currently specified in Section 2(72) of the Companies Act 2013) in a notification dated October 8, 1993. Following that, the Company was incorporated with the RBI under Section 45-IA of the RBI Act to operate as a non-banking financial institution that does not take public deposits, with a registration certificate bearing No.14.00013 dated February 16, 1998.

The RBI categorised the firm as a non-deposit taking asset financing non-banking financial company via a new registration certificate bearing No.14.00013 dated March 17, 2008. Following that, RBI reclassified the company as an NBFC-ND-IFC by a revised certificate number B-14.00013 dated November 22, 2010.

Its primary business is financing the procurement of rolling stock assets, which include both powered and unpowered vehicles such as locomotives, coaches, waggons, trucks, flats, electric multiple units containers, cranes trollies of all kinds, and other rolling stock components as identified in the Standard Lease Agreement (collectively 'Rolling Stock Assets'), as well as renting of railway infrastructure assets and national projects of the Government of India (collectively 'P'). 

The Company is in charge of raising funds required for such initiatives. The firm has contributed significantly to the capacity improvement of the Indian Railways over the previous three decades by funding a percentage of its yearly plan expenditure.

The Company is designated as an "Infrastructure Finance Company" by Section 45-IA of the Reserve Bank of India Act 1934 and registered as an NBFC (Systematically Important) with the Reserve Bank of India. For the Rolling Stock Assets, the Company uses a financial leasing arrangement. Except otherwise agreed upon by mutual consent, the lease length for Rolling Stock Assets is usually 30 years, with the main period of 15 years prompted through the second period of 15 years.

The primary amount applicable to the leased assets and the total average cost of borrowing along with a margin defined by the MOR in collaboration with the firm at the end of each fiscal year is effectively due during the first 15-year lease period. The total average cost of borrowing often includes any charges spent by the corporation on foreign currency hedging costs and/or losses (and profits, if any) and any hedging costs for interest rate fluctuations.

The firm charges the Indian Railways a nominal amount for the next 15 years, subject to adjustment on mutually agreeable circumstances. The Company also uses a leasing strategy for Project Assets, with 30-year lease durations being the norm.