Indian Railway Finance Corporation is set to provide the rail sector a large amount of money, which is of Rs. 1,50,000 crore. This is a loan which will be provided to the rail sector.

This loan will be from Life Insurance Corporation and the instrument used will be a 30-year paper, which shows competitive rates for the Indian Railways.  The loan is going to be raised from LIC over 5 years. This money is going to be used to expand the railway systems. This money will also be beneficial for the delayed projects.

Since the railways cannot directly borrow and take services of IRFC, many funds will be raised by IRCON and RITES from LIC. It is heard that the other rail PSUs will be raising around Rs.17,000 crore funds this year from LIC.

The IRFC has managed to rise over Rs 1.3 lakh crores from investment markets for the Indian Railways in the past 26 years. Raising funds from LIC for railways is a win-win situation as LIC too will benefit from the projects. As for the rail sector, long delayed projects will be completed quickly and other projects can start up as well.

The railway has made a budget for the highest capital investment of Rs. 1 lakh crore for current fiscal. This also includes a support of Rs. 17,655 crore and Rs. 40,000 crore from the IRFC.

It is heard that the IRFC is more than happy to raise more and more funds for the Indian Railways. The IRFC will only earn marginal return of around 50 bps. There are interest and money risks, which are accepted by the Indian Railways. The loan is a 30-year lease, and within half of the time, the interest rate and principal have to almost be recovered by the financial organization.

We just hope that the money is utilised in modernizing and bringing new advancements to our rail sector.