Indian Railway Finance Corporation (IRFC) plans to raise about ₹24000-28,000 crore (less than $3 billion) through external commercial borrowings in what would be one of the largest overseas borrowing programmes by a state-run company in recent years, even as the financial markets remain rattled by the war in West Asia, chairman and managing director Manoj Kumar Dubey said.
The railway financier is likely to lean heavily on yen-denominated loans in FY27 as it looks to fund a widening infrastructure portfolio beyond the railway sector, with a focus on large government and public sector projects, Dubey said in an interview.
The proposed overseas borrowing is part of IRFC’s approved ₹70,000 crore fundraising plan for FY27 aimed at financing projects including those linked to the Indian Railways such as metro rail, renewable energy, power generation and transmission, warehousing and urban mobility.
“We are looking at the lucrative foreign market for our fundraising programme in the current fiscal. We are targeting 35-40% of total annual borrowings under the ECB route. In addition, we will again tap funds through deep discount zero coupon bonds to the tune of ₹20,000 crore in FY27 in tranches,” Dubey said.
He added that with government backing, a zero bad-loan portfolio and the lowest overhead cost of about 15 bps to revenue, it would be able to support infrastructure financing at low interest rates. IRFC’s average lending rate is 7.9%.
has a presence in lending and has provided funds to companies in the railway sector including Rail Vikas Nigam Ltd, Konkan Railway Corporation Ltd, Rail Land Development Authority, Railtel Corporation of India and Pipavav Railway Corporation Ltd.
The ECB programme is expected to rank among the largest offshore fundraises by a public sector entity in recent years, underscoring the government’s push to deepen alternative financing channels for infrastructure creation amid tightening domestic liquidity conditions.
Mix of options
Dubey said IRFC will tap both the domestic and international markets in multiple tranches, depending on funding requirements and market conditions.
The company is evaluating a broad mix of instruments including ECBs, global medium-term notes, foreign currency bonds, masala bonds, 54 EC bonds that allow taxpayers to save on long-term capital gains tax from selling immovable property, green and ESG bonds, multilateral loans, debentures and other structured financing products.
IRFC had approval for ECBs of $1.1 billion, of which $700 million was raised and disbursed in FY26.
“The balance lending would also be used up in FY27 along with fresh rounds of ECB during the course of the year, may be in three to four tranches,” Dubey said.
, a Navratna company under the ministry of , reported a 7.8% growth in net profit to ₹7,009.1 crore on revenue from operations of ₹27,284 crore in FY26, its first full year of strategic diversification into funding projects outside the railway fold. Its net worth was ₹56,748.76 crore and assets under management rose to ₹4.85 lakh crore.
IRFC sanctioned projects worth ₹72,949 crore in FY26 and disbursed ₹35,067 crore, exceeding its annual guidance. It actively participated in competitive and bilateral financing opportunities, securing bids worth about ₹56,251 crore.
Dubey said IRFC’s funding activity will proceed at the same pace as in FY26.
“We want to maintain sanction and disbursement at ₹75,000 crore and ₹35,000 crore even in FY27. In fact, we are targeting some 15 large projects requiring funding of ₹15,000 crore or more over the next three years so that we touch ₹3 lakh of sanction in four years of our operations outside the Indian Railway shadow beginning FY26,” Dubey said.
He said that the whole-of-government approach where IRFC will fund only large projects in the secure government sector would help the institution maintain its zero bad loan status.