IRFC looking to diversify revenue streams, says CMD Amitabh Banerjee

IRFC is set to expand its wings with its plans of diversification and in line with the govt mandate, it can finance non-railway projects that have got a backward and/or a forward linkage with Railways

Indian Railway Finance Corporation (IRFC) plans to go beyond funding rolling stock, railway projects, and capacity enhancement works. In an interview to Twesh Mishra, IRFC’s Chairman and Managing Director Amitabh Banerjee says the company is keen on diversifying into non-railway projects that have a backward or a forward linkage with the Indian Railways. The dedicated market-borrowing arm of Indian Railways also aims to raise Rs 65,258 crores in the current financial year. Edited excerpts:

Q: How much money does IRFC intend to raise in the current financial year? How much has been raised till now?

A: IRFC plans to raise Rs 65,258 crore from both domestic and overseas markets in the current financial year, almost 50 per cent of which has been raised and disbursed to the Ministry of Railways till now. The company disbursed Rs 1.04 trillion in 2020-21 (FY21), which is so far the highest funding to Indian Railways in one fiscal year.

Q: What growth opportunities does IRFC expect from the National Rail Plan 2030?

A: IRFC contributed 67 per cent to the railway ministry’s capital outlay last year. Accordingly, IRFC is all geared up to fulfil its mandate of providing extra budgetary resource (EBR) financing to the ministry at the most competitive cost, and will continue to finance a significant part of projects under the National Rail Plan (NRP).

Q: How has IRFC's operations evolved after the Railway Budget was merged with the Union Budget?

A: IRFC’s mandate increased manifold since 2017, when the Central government merged the Railway Budget with the Union Budget, thus ending a practice that had started in 1924. The annual borrowing target mandated by the Ministry of Railways has registered an exponential growth with the target reaching Rs 1.04 trillion in FY21 as against Rs 11,000 crore in FY15, which is an increase of about 10 times.

Q: Does IRFC plan to diversify its revenue streams by financing non-railway projects?

A: The Government of India has encouraged private participation in rail projects and has approved participative models for rail connectivity and capacity augmentation projects, allowing private ownership of certain segments of the Indian Railways. IRFC is set to expand its wings, and as per the mandate, it can finance non-Railway projects that have a backward and/or a forward linkage with the Indian Railways, which would include high-speed rails, dedicated freight corridors, station development, port development and multi-modal logistic parks.

Q: IRFC had routed long-term money from LIC to the Indian Railways. How will this arrangement change after LIC’s IPO?

A: IRFC had started funding railway projects through institutional finance from the Life Insurance Corporation of India (LIC) in 2016. LIC was one of the sources of funding the railway projects but the arrangement expired on March 31 2020. Presently, there is no arrangement between IRFC and LIC for routing long-term money to the Indian Railways.