Infrastructure
Indian Railways: Govt Eyes Partial Stake Sale In Indian Railway Finance Corp (IRFC) To Meet Its Divestment Targets
Ankit Saxena
Aug 16, 2023, 04:19 PM | Updated 04:27 PM IST
Save & read from anywhere!
Bookmark stories for easy access on any device or the Swarajya app.
The Indian government is considering selling a portion of its stake in the state-owned Indian Railway Finance Corp (IRFC) in order to meet its divestment targets for the year, according to a MoneyControl report.
Currently, the government holds a majority ownership of over 86 percent in IRFC, which serves as the dedicated funding arm for Indian Railways.
IRFC raises funds from financial markets to finance the acquisition and creation of rolling stock and project assets. These assets are then leased out to Indian Railways through a finance lease agreement.
A government official stated that the stake sale will happen soon. The government has not yet determined the exact amount to be sold, but it plans to sell up to 11 per cent in multiple tranches.
In addition to other benefits, the sale would help the government meet the minimum public shareholding norms set by regulators, which require public companies to maintain at least 25 per cent public shareholding.
While state-run firms have more flexibility in this matter, the government aims to reduce its shareholding to comply with the norms.
IRFC, which is under the administrative control of the Ministry of Railways is a Schedule ‘A’ Public Sector Enterprise. It has played a crucial role in the expansion of the Indian Railways.
IRFC and RITES recently signed a Memorandum of Understanding (MoU) to enhance their cooperation in financing and developing railway infrastructure projects.
The deal aims to identify mutual areas of collaboration with IRFC’s to provide financial assistance to projects/ institutions that have backward and or forward linkages with the Railways.
In the current fiscal year, the government has so far raised 56 billion rupees — against the target of 510 billion rupees.
In a similar move, the government recently sold over 5 per cent of its stake in Rail Vikas Nigam (RVNL), generating 13.66 billion rupees in revenue.
Save & read from anywhere!
Bookmark stories for easy access on any device or the Swarajya app.
Introducing ElectionsHQ + 50 Ground Reports Project
The 2024 elections might seem easy to guess, but there are some important questions that shouldn't be missed.
Do freebies still sway voters? Do people prioritise infrastructure when voting? How will Punjab vote?
The answers to these questions provide great insights into where we, as a country, are headed in the years to come.
Swarajya is starting a project with an aim to do 50 solid ground stories and a smart commentary service on WhatsApp, a one-of-a-kind. We'd love your support during this election season.
Click below to contribute.