Indian Railway Finance Corportaion (IRFC) will now be a Navratna Central Public Sector Enterprise, Finance Ministry announced on Monday. The status provides more financial autonomy to entities.

“The Government has approved the upgradation of Indian Railway Finance Corporation (IRFC) to Navratna CPSE, making it the 26th Navratna among CPSEs,” Public Enterprises Department said in a social media post. IRFC is a Ministry of Railways CPSE with an annual turnover of ₹26,644 crore, PAT of ₹6,412 crore and a net worth of ₹49,178 crore for FY 2023-24.

The powers presently delegated to the Boards of Navratna PSUs include the capacity to incur capital expenditure on purchase of new items or for replacement, without any monetary ceiling. They can enter into technology joint ventures or strategic alliances. They can go for organisational restructuring including establishment of profit centres, opening of offices in India and abroad, creating new activity centres, and so on.

Finance Ministry has defined certain parameters to become a Navratna. The Miniratna Category – I and Schedule ‘A’ CPSEs, which have obtained ‘excellent’ or ‘very good’ rating under the Memorandum of Understanding system in three of the last five years, and have a composite score of 60 or above in the six selected performance parameters, namely, net profit to net worth, manpower cost to total cost of production/services, profit before depreciation, interest and taxes to capital employed, profit before interest and taxes to turnover, earning per share and inter-sectoral performance.

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According to the website of IRFC, it was set up on December 12, 1986, as the dedicated financing arm of the Indian Railways for mobilising funds from domestic as well as overseas capital markets. It is also registered as Systemically Important Non–Deposit taking Non Banking Financial Company (NBFC – ND-SI) and Infrastructure Finance Company (NBFC- IFC) with Reserve Bank of India (RBI).

The primary objective of IRFC is to meet the predominant portion of ‘Extra Budgetary Resources’ (EBR) requirement of the Indian Railways through market borrowings at the most competitive rates and terms. The Company’s principal business therefore is to borrow funds from the financial markets to finance the acquisition / creation of assets which are then leased out to the Indian Railways.

From 2011-12 onwards, IRFC has forayed into funding of railway projects and capacity enhancement works. It has also been lending to various entities in Railway sector like Rail Vikas Nigam Limited (RVNL), Railtel, Konkan Railway Corporation Limited (KRCL), Pipavav Railway Corporation Limited (PRCL) etc.