Indian Railway Finance Corporation (IRFC) has joined hands with India Infrastructure Finance Company Limited (IIFCL) to leverage financing opportunities for viable railways infrastructure projects.
IRFC, a railways public sector undertaking (PSU), signed a memorandum of understanding (MoU) with IIFCL, a public sector enterprise under the Ministry of Finance.
The MoU will strengthen cooperation in financing railway infrastructure projects with forward and backward linkages to the Indian Railways sector.
Through this MoU, IRFC and IIFCL plan to amplify each other’s capabilities, enabling them to jointly leverage the financing opportunities for viable infrastructure projects.
The MoU was signed by IRFC Chairman and Managing Director Amitabh Banerjee and IIFCL Managing Director Padmanabhan Raja Jaishankar, in the presence of senior officers from the organisations.
“The partnership between IRFC and IIFCL is a step towards realising Hon’ble Prime Minister Narendra Modi’s vision of making India a $5 trillion economy by 2025,” Banerjee said.
“This symbiotic relationship between two premier financing institutions would play a pivotal role in providing impetus towards development of railway infrastructure in the country, leading to enhanced customer experience and reduced logistics cost by facilitating this state-of-the-art infrastructure.”
Underscoring the importance of infrastructure sector for development of the Indian economy, Jaishankar said, “IIFCL has been leading the infrastructure financing sector in the country and this MoU will enable both the parties to strengthen cooperation in co-financing/consortium financing of infrastructure projects, including railways sector.”
The IRFC was set up in December 1986 for mobilising funds from domestic and overseas markets to meet the predominant portion of extra budgetary resources (EBR) requirements of Indian Railways.
The company has played a critical role in augmenting the capital expenditure of Indian Railways, by way of mobilising funds across the entire financial spectrum, forming part of EBR funding.
IRFC has funded acquisition of 13,339 locomotives, 74,467 passenger coaches and 259,851 freight wagons.
IRFC has a low-risk cost-plus business model. IRFC, 36 years since its inception has never had any non-performing asset (NPA).
Further, IRFC has resorted to green borrowing of approximately $2 billion from the offshore market to facilitate the net zero carbon emission by 2030 of Indian Railways.
The cumulative funding to the Indian Railway sector by IRFC has crossed Rs 5.04 trillion mark by the end of the first quarter of FY2022-23.
IIFCL was set up in 2006, as a wholly-owned government of India enterprise to cater to the long-term financing needs of the infrastructure sector in India.
Since its inception, IIFCL has been actively involved in the promotion, development and financing of the infrastructure sector in India.
Till date, IIFCL has sanctioned more than Rs 2.3 lakh crore to around 650 projects so far, with a total outlay of Rs 11.70 lakh crore, and has disbursed over Rs 1.1 lakh crore.
Among the marquee projects IIFCL has sanctioned in the last two years are the Ganga Expressway, Pune IT City Metro, Jewar and Navi Mumbai international airports etc.
IIFCL has provided financial assistance to the construction of 29,000 km of new roads.
It is also significantly advancing the nation’s port infrastructure with the building of 800 million tonnes per annum.
Arun Kumar Das is a senior journalist covering railways. He can be contacted at email@example.com.
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