IRFC board on Monday approved raising of funds for the FY27 up to Rs 70,000 crore. In stock exchange filings, the state-run company said that the funds will be raised at an “appropriate time keeping in view the market conditions and requirement of funds for meeting the requirement of Indian Railways, disbursement for diversification under IRFC 2.0, committed liabilities, refinancing of existing loans and for other general corporate purposes.”
IRFC will borrow these funds in one or more tranches from the domestic or offshore markets through external commercial borrowings (ECBs), including global medium term note programme, foreign currency bonds, Rupee offshore bonds, green bonds, environmental, social and governance (ESG) bonds, offshore loans, and masala loans, zero coupon bonds, perpetual bonds, etc.
Besides, the financing could involve loans or bonds from banks, financial institutions, non-banking financial companies, multilateral agencies and bilateral lenders and capital gain taxable bonds under Section 54 EC of Income Tax Act, the company said.
$700 million raised through ECBs
Over the past six months, the specialised financing arm of the railways has raised about $700 million through ECBs (in two different rounds) besides issuing zero coupons bonds worth Rs 2,981 crore in November 2025.
Over the past year, IRFC has diversified its lending portfolio while reducing its role as the railways’ financier. Under IRFC 2.0, the company is funding projects in power, ports and renewable energy. In December 2025, the company sanctioned a Rs 5,000 crore rupee term loan to Maharashtra State Power Generation Company (MAHAGENCO).
Experts said that the diversified borrowing strategy, which covers domestic markets, ECBs, masala bonds, and ESG-linked instruments, is a smart move because it allows IRFC to optimise borrowing costs while aligning part of its funding with sustainability-linked investments such as electrification, green traction, and energy-efficient rolling stock.
“Going forward, the role of IRFC is likely to broaden with the company potentially funding large PPP projects, logistics parks, and catalysing private sector participation in railway assets,” said Lalit Chandra Trivedi, former general manager, East Central Railway.
IRFC’s history
Historically, IRFC has provided funding to railways through extra budgetary resources (EBR) to finance the acquisition of rolling stock (locomotives, coaches, wagons) and development of railway infrastructure. But from FY22 onwards, the capex requirements of railways has been largely funded through gross budgetary support (GBS) with almost nil support from EBR.
Due to this, the existence of IRFC as sole EBR financier for railways had come under question, resulting in government devising a mechanism through which IRFC can finance projects with forward and backward linkages with railways.