Indian Railway Finance Corporation, the financing branch of Indian Railways, has refinanced a ₹9,821 crore foreign currency loan previously held by Dedicated Freight Corridor Corporation of India. The original debt, sourced from the World Bank for the Eastern Dedicated Freight Corridor, has been converted into a rupee-denominated facility to save the government ₹2,700 crore in interest.
This shift offers several strategic advantages:
- Currency risk mitigation: Shifting to rupee-based financing removes exposure to exchange rate volatility, protecting the project from fluctuations in foreign currency markets.
- Cash flow predictability: The new structure ensures debt servicing is aligned with the corridor’s rupee-based revenue, enhancing long-term financial stability.
- Domestic maturity: The deal highlights the capability of Indian financial institutions to support long-gestation infrastructure projects.