State-owned Indian Railway Finance Corporation (IRFC), the sole lender of Indian Railways, is currently reinventing itself as IRFC 2.0 with an expanded mandate, and is planning to lend across sectors, says Manoj Kumar Dubey, chairman and managing director (CMD). In an interview with Dhruvaksh Saha, Dubey shares the company's plans on ₹60,000 crore loan sanctions in 2025-26 (FY26), and refinancing multilateral debt. Edited excerpts:
With your mandate to lend to any project with linkages to railways, what new business are you eyeing?
In our diversification mode, we are eyeing beyond just railways. In the railway business, the net interest margin (NIM) and profit are predictable, but on the non-railway side, there is scope to grow our NIM and profit after tax (PAT). At the same time, we are a zero non-performing asset (NPA) lender, and that status is our USP, so we are cherry-picking who we want to lend to. For example, we have lent to power-generation and transmission companies, but we are clear that we will not lend to distribution firms. By the end of the year, we are eyeing exceeding the target of ₹30,000 crore loan disbursement. Now that we are a multi-client company, our NIMs will improve every quarter.
You have just concluded a ₹10,000 crore deal to refinance the eastern freight corridor’s World Bank loan. What are the plans going forward?
Freight corridor refinancing was a marquee project for us as it was unique. This was a dollar-denominated World Bank loan through the finance ministry, and it was not hedged. With the rupee sliding and dollar becoming dearer, the interest rate had crossed 10 per cent. We started thinking of it when the rupee was around 84. The Dedicated Freight Corridor Corporation of India Limited (DFCCIL) made the proposal and we raised the issue with the railway board. We made a presentation to the Department of Economic Affairs as well. The World Bank was very happy as they typically need to fund at the beginning of a project. They are willing to come out of it when the commercial operation has started (the eastern corridor was completed in October 2023). Moreover, they have a limitation on lending for every country. So, till the time they are stuck with ongoing projects, they can’t fund other needy projects where they can do risk-sharing. They were very happy to find somebody in the domestic market who was willing to refinance it. We believe not just in Make in India, but also Fund in India. Today, the potential to fund bigger projects is lying within the government system itself.
There are several other multilateral bank-funded projects today. Are there more such plans?
We are looking at another model — multilateral agencies are willing to cofinance with us. In future, we may be lending along with agencies where they are financing the infrastructure while we finance the rolling stock, and we eventually also take over the infrastructure part when commercial operations start. This is the next phase. There is a lot of appetite in rapid rail and Metros. Every state has potential. This funding used to be done by multilateral agencies, albeit with linkages like transfer of technology or mandatory procurement from a particular country. With 25-30 years of experience, perhaps that kind of handholding from multilateral agencies is not necessary every time.
What is the opportunity in this new space for you?
Around 25 Metro projects have either been conceived and underway or are looking for funding. There is an appetite of nearly 400 km of Metro projects, which presents an annual financing opportunity of ₹1 trillion. We are equipped to finance both through-and-through or in a cofinancing model with multilateral agencies.
How do you foresee the refinancing of multilateral agency projects going forward?
It is on the platter. Perhaps 2026-27 will open the floodgates for this kind of business. This year, we cemented our position. Putting a number on this will be difficult, but a general sense is that there is ₹10,000 crore to ₹15,000 crore of business available every year. Many corporations are already in talks with us.
Is the Indian Railways likely to come back to the borrowing market?
They have not said “No”. Nearly 30 ministries compete for the government’s resources. At some point, they (Indian Railways) will surely come back to us. Going forward, the appetite for the Indian Railways will not be less than ₹2.5 trillion every year. Today, all of it comes from budgetary support, but as the railways’ sole financing arm, we are ready for whenever they want to come back to us.
Will IRFC look at the private sector for lending anytime soon?
Our philosophy right now is that we will not go for a private entity directly. We will stick with government-linked entities, but if a private entity is coming through a public private partnership (PPP), and signing a concession agreement with the railways or linked entities, we can see. The railways has come out with a ₹30,000-odd crore list of PPP projects, and we have set our sights on them. Even for the riskier PPP projects (where private players take higher risks), we will have a close look at them, but the government’s own appraisal and approval process is quite thorough.
 "Eyeing cofinancing with multilateral agencies, says IRFC CMD Dubey")
