BL reported that the Indian Railway Finance Corporation has increased about INR 2,700 crore till date this fiscal at a weighted average cost of 9% and an average tenor of 10.22 years. In 2007-08, IRFC had increased INR 4,609 crore at 9.3%.
As on March 2008, IRFC had financed 54% of 3,447 electric locos of Indian Railways, 43% of 5,210 diesel locos, 66.43% of 41,623 coaches and 51.55% of 2,40,562 wagons of Indian Railways.

The financing arm of railways is looking to increased USD 400 million more from the external market this fiscal when the market conditions are conducive having recently raised USD100 million.

Mr Rakesh Kashyap MD of IRFC said that “We increased USD 100 million from Bank of Tokyo-Mitsubishi, at an attractive cost of 145 basis points over the USD Libor for a 5 year tenor, which means a cost of about 4%.”

Mr Kashyan said that with this, the average cost of borrowing for INR 2,700 crore is about 9%. He said that “If we were to add the notional hedging cost, the cost of borrowing touches 9.4%.”

As an internal discipline measure, the IRFC has an exchange rate variation account to which it allocates certain funds. This account is operated till it hedges. He said that it has had 3 bond issues since July. He added that “Around July to August, we increased INR 604 crore by issuing 10 year bonds. In October, we had two bond issues INR 855 crore and INR 615 crore.”

In the current fiscal, IRFC is budgeted to increased INR 7,200 crore including INR 293 crore for its sister concern Rail Vikas Nigam Ltd. It has already given INR 140 crore to RVNL. IRFC may also opt for some securitization deals in the domestic market to keep its debt equity ratio below the RBI prescribed levels of 10:1.