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The company was incorporated as Indian Railway Finance Corporation Limited on December 12, 1986, as a public limited company under the Companies Act, 1956, pursuant to a certificate of incorporation issued by the Registrar of Companies, National Capital Territory of Delhi & Haryana (RoC). Indian Railway Finance Corporation is wholly-owned by the Government of India acting through the MoR. It is registered with the Reserve Bank of India as a NBFC (Systematically Important) and is classified under the category of an ‘Infrastructure Finance Company’ under Section 45-IA of the Reserve Bank of India Act, 1934. It was notified as a ‘Public Financial Institution’ under the Companies Act, 1956 through a notification dated October 8, 1993 issued by the Ministry of Corporate Affairs.
The company is responsible for raising the finance necessary for such activities. Over the last three decades, it has played a significant role in supporting the capacity enhancement of the Indian Railways by financing a proportion of its annual plan outlay. The company follows a financial leasing model for financing the Rolling Stock Assets. The period of lease with respect to Rolling Stock Assets is typically 30 years comprising a primary period of 15 years followed by a secondary period of 15 years, unless otherwise revised by mutual consent. In terms of the leasing arrangements, the principal amount pertaining to the leased assets is effectively payable during the primary 15 years lease period, along with the weighted average cost of incremental borrowing and a margin determined by the MOR in consultation with it at the end of each Fiscal.
Business area of the company
The company is the dedicated market borrowing arm of the Indian Railways. Its primary business is financing the acquisition of rolling stock assets, which includes both powered and unpowered vehicles, for example locomotives, coaches, wagons, trucks, flats, electric multiple units, containers, cranes, trollies of all kinds and other items of rolling stock components as enumerated in the Standard Lease Agreement (collectively, “Rolling Stock Assets), leasing of railway infrastructure assets and national projects of the Government of India (collectively, Project Assets) and lending to other entities under the Ministry of Railways, Government of India (MoR). The MoR is responsible for the procurement of Rolling Stock Assets and for the improvement, expansion and maintenance of Project Assets.
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