Rlys To Offer Wagon Leasing Through Fis

The ministry of railways is planning to rope in foreign and Indian financial institutions in wagon leasing business. The idea is to improve on the own-your-wagon scheme which has performed below expectations.

The financial institutions are currently extending loans to corporates for availing the own-your-wagon scheme. We want them to buy the wagons themselves and lease them out to corporates, Shanti Narayan, member-traffic in the ministry told Business Standard.

We are particularly keen on foreign investments. The foreign investor can expect a higher rate of return because he will bring in low-cost funds, Narayan said.

The ministry recently slashed the target for mobilising resources through the own-your-wagon scheme from Rs 900 crore to Rs 450 crore. There are serious doubts being expressed in Rail Bhavan whether it will be able to achieve even the reduced target.

The ministry is offering a 16 per cent rate of return to the financial institutions which enter the business.

Under the existing scheme, companies in the cement, steel, fertiliser and other sectors are leasing out wagons on 16 per cent rental charges.

Another area for urgent consideration will be the extension of the leasing of rolling stock under the own-your-wagon scheme through financial institutions thereby releasing pressure on capital requirements for rolling stock acquisition programme.

Ministry of finance would, however, need to exempt such acquisitions from sales and assure depreciation rates allowed for road vehicles to make it viable for financial institutions.