IRFC Powers Up Hyderabad Metro with ₹13.5k Crore Financing

Indian Railway Finance Corporation Ltd. (IRFC), a Navratna Central Public Sector Enterprise under the Ministry of Railways, has signed a ₹13,527 crore term loan agreement with L&T Metro Rail (Hyderabad) Limited (L&TMRHL) to refinance the debt obligations of the Hyderabad Metro Rail project. The transaction is being viewed as one of the most significant refinancing deals in India’s urban transport sector.

The agreement was signed in the presence of IRFC Chairman and Managing Director & CEO Manoj Kumar Dubey and Telangana Chief Secretary K. Ramakrishna Rao, highlighting the strategic importance of the financing arrangement for Hyderabad’s urban mobility infrastructure.

IRFC said the transaction reflects its ongoing transformation into a diversified infrastructure financing institution while continuing to leverage its expertise in long-term transportation finance. The initiative is aligned with the Government of India’s “Viksit Bharat” vision focused on modernising and expanding national infrastructure.

Commenting on the development, Manoj Kumar Dubey said the deal demonstrates IRFC’s capability to structure innovative long-tenor financing solutions for nationally important infrastructure assets. He added that the transaction also reinforces the company’s commitment to supporting sustainable urban mobility through efficient capital mobilisation.

The refinancing follows the transfer of full ownership of L&T Metro Rail (Hyderabad) Limited from Larsen & Toubro Limited to the Government of Telangana through Hyderabad Metro Rail Limited (HMRL). The transition has effectively brought the metro network under state ownership, strengthening its role as a key public transport asset while supporting future expansion plans.

The loan facility will be utilised to refinance existing debt obligations, including non-convertible debentures (NCDs), commercial papers, and term loans. The refinancing is expected to facilitate an orderly exit for existing lenders while improving the long-term financial sustainability of the project.

Hyderabad Metro Rail Phase-I covers 69.2 kilometres across three corridors with 57 stations, making it one of the world’s largest metro rail projects developed under the public-private partnership (PPP) model. The network currently serves more than five lakh passenger journeys daily and remains a critical component of Hyderabad’s urban transport ecosystem.

According to officials, the refinancing will strengthen financial flexibility and support the planned expansion of the metro network into emerging growth corridors. This includes capacity enhancement, network extension, and improved last-mile connectivity across the Hyderabad metropolitan region.

The 20-year financing facility has been structured with quarterly repayments and replaces higher-cost borrowings with competitively priced long-term rupee financing. The arrangement does not include processing fees, commitment charges, or prepayment penalties, making it a cost-efficient refinancing structure.

The transaction is supported by a comprehensive credit enhancement framework, including an unconditional and irrevocable undertaking by the Government of Telangana for debt servicing, a state government guarantee, and an RBI-backed direct debit mechanism.

Dubey further stated that the agreement demonstrates how large-scale urban infrastructure projects can be financed domestically through long-tenor structures aligned with project cash flows. He reiterated IRFC’s commitment to channeling domestic savings into infrastructure development through sustainable financing mechanisms.

Backed by strong sovereign support, a robust credit profile, and a zero-NPA track record, IRFC said it remains well positioned to finance metro rail systems and other major infrastructure projects across India.

The refinancing is expected to enhance the financial stability of the Hyderabad Metro project while giving the Government of Telangana greater flexibility to accelerate future expansion, including new corridors and improved regional connectivity. The transaction may also serve as a model for financing urban transit infrastructure in other parts of the country as India continues to invest in sustainable and integrated mobility solutions.

For IRFC, the agreement marks another important milestone in its gradual diversification beyond traditional railway financing into broader infrastructure sectors with significant national development impact.

News by Rahul Yelligetti.