Indian Railway Finance Corporation Ltd. (IRFC), the funding arm of Indian Railways, has signed a memorandum of understanding (MoU) with India Infrastructure Finance Company Ltd. (IIFCL) to strengthen cooperation in financing railway infrastructure projects.
Reacting to the news, IRFC shares gained as much as 0.7% to ₹21.5, against the previous closing price of ₹21.35 on the Bombay Stock Exchange (BSE). In comparison, the 30-share Sensex was trading 141 points higher at 57,288 levels, with 18 of its constituents trading in green zone.
IRFC in a post market release on Tuesday said that it has inked a pact with IIFCL to boost cooperation in financing railway infrastructure projects with forward and backward linkages to Indian Railways sector. The MoU will enable both the financing institutions to scale-up their capabilities and explore such funding opportunities together by combining their competence and expertise.
“The MoU will benefit both IRFC and IIFCL to capitalise on each other’s expertise in infrastructure project financing, project due diligence, syndication, credit enhancement, re-financing etc,” IRFC said in an exchange filing.
Established in 2006, India Infrastructure Finance Company Limited (IIFCL) is a public sector enterprise under the Ministry of Finance that caters to the long-term financing needs of the infrastructure sector in India. It is a Non-Banking Financial Company-Non Deposit-Infrastructure Finance Company (NBFC-ND-IFC) registered with the Reserve Bank of India (RBI).
As per the agreement, IRFC and IIFCL plan to amplify each other’s capabilities, enabling them to jointly leverage the financing opportunities for viable infrastructure projects.
Speaking on the occasion, Amitabh Banerjee, CMD, IRFC said, “The partnership between IRFC and IIFCL is a step towards realising Prime Minister Narendra Modi’s vision of making India a $5 trillion economy by 2025. This symbiotic relationship between two premier financing institutions would play a pivotal role in providing impetus towards development of railway infrastructure in the country, leading to enhanced customer experience and reduce logistics cost by facilitating this state-of-the-art infrastructure.”
Underscoring the importance of infrastructure sector for development of the Indian economy, P R Jaishankar, MD, IIFCL said, “IIFCL has been leading the infrastructure financing sector in the country and this MOU will enable both the parties to strengthen cooperation in co-financing / consortium financing of infrastructure projects, including railways sector.”
For April-June quarter of 2022 (Q1 FY23), IRFC reported a net profit of ₹1,662 crore as compared to ₹1,502 crore in the corresponding period last year, registering a year-on-year (YoY) growth of 10.6%. The total revenue from operations increased by 22.8% to ₹5,627 crore, from ₹4,582 crore in the same period last year. During the quarter under review, the net interest income grew 11.9% YoY to ₹1,687.8 crore, while finance cost surged 28.2% YoY to ₹3,939.6 crore.