India Infrastructure Finance Company Ltd. (IIFCL) and Indian Railway Finance Corporation Ltd. (IRFC), the financial arm of Indian Railways, have signed a memorandum of understanding (MoU) to increase their cooperation in financing railway infrastructure projects.
In response to the news, IRFC shares increased by as much as 0.7% to 21.5 on the Bombay Stock Exchange, up from their previous closing price of 21.35 (BSE). The 30-share Sensex, in contrast, was up 141 points at 57,288 levels and 18 of its members were trading in the green.
On Tuesday, October 11, IRFC announced that it had signed a deal with IIFCL to increase collaboration in financing railway infrastructure projects with forward and backward links to the Indian Railways sector. By combining their skills and knowledge, the two financial institutions will be able to build up their capabilities and explore these financial prospects.
In an exchange filing, IRFC stated that the agreement will allow it and IIFCL to “capitalize on each other’s competence in infrastructure project finance, project due diligence, syndication, credit enhancement, re-financing, etc.”
India Infrastructure Finance Company Limited (IIFCL), a public sector organisation that belongs to the Ministry of Finance, was established in 2006 to meet the long-term financing requirements of India’s infrastructure industry. It is an infrastructure finance company that is registered with the Reserve Bank of India(RBI) as an NBFC-ND-IFC or Non-Banking Financial Company-Non Deposit Company.
According to the agreement, IRFC and IIFCL intend to complement one another’s strengths so they can harness financing prospects for financially sound infrastructure projects.
The alliance between IRFC and IIFCL is a step towards achieving Prime Minister Narendra Modi’s aim of creating India a $5 trillion economy by 2025, Amitabh Banerjee, CMD, IRFC, stated in a speech on the occasion. This symbiotic partnership between two prominent financial institutions will play a crucial part in spurring the growth of the nation’s railway system and improving customer experience while lowering logistics costs.
IIFCL has been at the forefront of infrastructure financing in India, and this MOU will allow both parties to strengthen their cooperation in co-financing and consortium financing of infrastructure projects, including those in the railway sector, according to P.R. Jaishankar, MD of IIFCL, who emphasized the importance of the infrastructure sector for the development of the Indian economy.
The IRFC recorded a net profit of $1,662 billion for the April–June quarter of 2022 (Q1 FY23), up from Rs 1,502 crore in the same quarter last year, representing a year–over–year (YoY) gain of 10.6%. From Rs 4,582 crore in the same period last year to Rs 5,627 crore this year, the overall revenue from operations climbed by 22.8%. Net interest income increased 11.9% year over year to Rs 1,687.8 crore during the quarter under review, while finance costs increased 28.2% year over year to Rs 3,939.6 crore.
