Funding Pivot
IRFC may shy away from railway financing FY27, fund commercial plans
This story was originally published at 15:09 IST on 10 March 2026
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--IRFC source: May not fund railways projects in a big way in FY27
--IRFC source: Aim to disburse INR 300 bln-INR 400 bln of funds in FY27
--IRFC source: In talks with partners to foray into housing finance sector
--IRFC source: May borrow INR 400 bln FY27 out of board-approved INR 700 bln
--IRFC source: To raise up to $1 bln from Japan's Sumitomo Mitsui, MUFG Bank
By Priyasmita Dutta and Sagar Sen
NEW DELHI – Breaking away from tradition, Indian Railway Finance Corp. Ltd. will likely fund a host of commercial projects in 2026-27 (Apr–Mar) instead of extending financing to Indian Railways in a big way, a senior official of the company said. The company has set an internal target to disburse INR 300 billion-INR 400 billion next fiscal, compared with the INR-300-billion disbursement target for the current year, the official told Informist.
"We have a strong pipeline of projects going ahead, and discussions are going on regarding lending to non-railway projects as well," the official said. Its lending pipeline includes projects in Haryana, Maharashtra, Tamil Nadu, Bhutan, and Chhattisgarh in FY27, with a few projects being beyond the funding requirements of the core railway sector.
The Navratna public sector enterprise is allowed to finance projects that have forward or backward linkages with railways. However, its lending to non-railway projects has so far remained limited. According to the official, the company is also in discussions with prospective partners to construct housing facilities for railway employees, which technically comes under 'backward linkage' to railways, and will help the company foray into the housing finance sector.
A key project that IRFC is planning to finance in FY27 belongs to Chennai Metro Rail Corp., which is being managed by L&T Construction, the official said. IRFC is also planning to finance a project in Bhutan, which is a joint venture between Tata Power Co. Ltd. and Bhutan's Druk Green Power Corp. The total project cost is estimated to be over INR 120 billion, and IRFC plans to extend loans worth over INR 50 billion in FY27 for this project, the official said. Under this, the two companies will set up a massive hydropower unit which will supply power to both countries.
In September, the company had signed a loan agreement with Maharashtra State Power Generation Co. Ltd. to provide up to INR 105.60 billion towards the upcoming 1,320 megawatt supercritical expansion project at the Koradi Thermal Power Station in Nagpur. IRFC also signed an agreement with Haryana Power Generation Corp. Ltd. to provide financing up to INR 59.29 billion for the upcoming 800-megawatt supercritical thermal power project at Deenbandhu Chhotu Ram Thermal Power Plant in Yamunanagar.
The company had also signed two agreements worth INR 166.40 billion to fund a power project in Chhattisgarh and a urea project in Odisha. This includes a rupee-term loan of INR 126.40 billion to Chhattisgarh State Power Generation Co. Ltd. to finance its upcoming 2X660 megawatt Super Critical Thermal Power Project at Hasdeo Thermal Power Station in Korba West.
On Monday, the IRFC board approved a market borrowing programme of up to INR 700 billion for FY27. According to the official, given the robust pipeline of projects, the board has provisioned for borrowing of up to INR 700 billion, but the actual fund-raising in FY27 is expected to be nearly half of this figure. "We may not raise the entire amount, and may raise up to INR 400 billion," the official said. The borrowing will be undertaken through a mix of domestic and overseas borrowing, the official added.
Following the recently held roadshow in Japan's capital Tokyo, IRFC signed a loan agreement to raise yen equivalent of $1 billion with Sumitomo Mitsui Banking Corp. and MUFG Bank Ltd. for FY27. In FY26, IRFC raised yen equivalent of $700 million from these Tokyo-based companies. According to the official, the tenure of the loans from Sumitomo Mitsui and MUFG Bank will likely be five to seven years.
IRFC had first raised funds from the Japanese market in FY22. It had raised the yen equivalent of $1.10 billion in two tranches of $700 million and $400 million, with a tenure of 10 years and seven years, respectively. These were in the form of green bonds or green loans.
For the nine months ended December, IRFC had reported a net profit of INR 53.24 billion, up 10.5% on year. At 1501 IST, shares of the company traded 3% higher at INR 100.58 on the National Stock Exchange. End
US$1 = INR 91.86
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Tanima Banerjee
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