Indian Railway Finance Corporation to Raise ₹28,000 Crore through External Commercial Borrowings in FY27

Indian Railway Finance Corporation to Raise ₹24,000-28,000 Crore Through Overseas Borrowings

In a move that is expected to be one of the largest overseas borrowing programmes by a state-run company in recent years, the Indian Railway Finance Corporation (IRFC) plans to raise approximately ₹24,000-28,000 crore (less than $3 billion) through external commercial borrowings. This ambitious fundraising plan is part of IRFC's approved ₹70,000 crore fundraising plan for Fiscal Year 2027, aimed at financing projects including those linked to Indian Railways, such as metro rail, renewable energy, power generation and transmission, warehousing, and urban mobility.

According to IRFC's chairman and managing director, Manoj Kumar Dubey, 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, IRFC aims to raise 35-40% of its total annual borrowings through the ECB route.

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IRFC 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. With government backing, a zero bad-loan portfolio, and the lowest overhead cost of about 15 bps to revenue, IRFC is confident that it will be able to support infrastructure financing at low interest rates. IRFC's average lending rate is 7.9%.

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. IRFC plans to 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, 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.

In FY26, IRFC reported a 7.8% growth in net profit to ₹7,009.1 crore on revenue from operations of ₹27,284 crore, 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.

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IRFC aims to maintain its sanction and disbursement pace in FY27, targeting ₹75,000 crore and ₹35,000 crore, respectively. The company is targeting some 15 large projects requiring funding of ₹15,000 crore or more over the next three years, with a goal of touching ₹3 lakh of sanction in four years of its operations outside the Indian Railway shadow beginning FY26. This whole-of-government approach, where IRFC will fund only large projects in the secure government sector, is expected to help the institution maintain its zero bad loan status.