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Last Updated On: 09-04-2011


What business is IRFC in? How is it linked to the Indian Railways?

IRFC  is the sole financing arm of the Ministry of Railways (MoR), the national rail transport agency of India, and finances about 50 per cent of the latter’s rolling stock requirement. The MoR finances the rest of its rolling stock through its internal resources and budgetary support. IRFC leases rolling stock to the MoR, which pays lease rentals in advance on a half-yearly basis.

 

IRFC is wholly owned by and has a close working relationship with the MoR. Presently its board of directors comprises key officials from the MoR and a representative of the Ministry of Finance (MoF). The MoR approves IRFC’s annual borrowing limits and proposed borrowings. The MoR notifies the company of its funding requirements after the railway budget is approved by Parliament. At the end of the financial year, IRFC enters into a standard lease agreement with the MoR, wherein the assets financed by it are earmarked and lease rentals are fixed at a mark­up over the average borrowing costs for the year.