The Indian Railway Finance Corporation (IRFC) plans to raise $150 million from external commercial borrowings (ECBs) in the next financial year.
A proposal has been submitted to the government for borrowing money through ECBs to partly meet the fund raising target of Rs 2,150 crore in 1997-98, Railways financial commissioner V Shivkumaran said.
The bulk of the borrowings will be from domestic sources such as bonds, he said.
Although ECBs are preferable for their lower rates of interest but their repayment period is shorter than for local borrowings.
There is also the risk of exchange fluctuations and a fall in rupee value would make long term repayment very expensive.
The IRFC has therefore decided on a mix of foreign and domestic borrowings depending upon its need and the repayment period.
The IRFC has raised Rs 1,500 crore till January 1997 out of its 1996-97 target of Rs 1,850 crore, Shivkumaran said.
The Indian Railway Finance Corporation made a profit of Rs 205.76 crore in 1995-96 and paid a dividend of 20 per cent on the paid up share capital amounting to Rs 46.40 crore.
The IRFC was rated very highly among lending institutions as it had an excellent repayment record. IRFC has raised Rs 6567.06 crore since its inception in 1986 including Rs 131.14 crore for the Konkan Railway Corporation. In 1995-96, it made its first ECB borrowing of $ 70 million.
The funds will be used to pay for rolling stock, new line development and other ongoing and new projects. The Railways estimate spending Rs 400 crore on new lines, Rs 300 crore on rail infrastructure development in the north-east and Rs 100 crore on the expansion of railway system in Jammu and Kashmir. Rolling stock has been allocated Rs 4,100 crore in 1997-98.
