ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Satnam Overseas

EPW Research Foundation Indian Railway Finance Corporation THE Indian Railway Finance Corporation was incorporated in December 1986 by the ministry of railways as a wholly- owned public sector undertaking for the purpose of raising resources for meeting the developmental needs of the railways. The funds raised by it in the form of bonds are utilised for acquisition of assets which are leased to the Indian railways. The company's principal source of income is the lease charges paid by the Indian railways on half-yearly basis which it utilises for payment of interest on bonds and their redemption. These lease payments to I RFC are budgeted every year and voted by parliament along with the railway budget and hence enjoy a zero- risk status. The entire rolling stock of the I RFC worth Rs 6,335.36 crore which specifically includes 1,043 locomotives, 4,406 passenger coaches, 51,949 wagons and 4 cranes has been leased to the railways. The rapid modernisation of the railways which was set in motion in the Seventh Plan involves investment in cost- effective technological changes in important areas of locomotives, passenger coaches and wagon design, upgradation of track structure, gauge conversion, sophistication of the signalling and telecommunication facilities and a systematic programme of computerisation towards better management practices and customer satisfaction. To finance these programmes, IRFC plans to tap the capital market with a twin bond issue of 20,00,000 secured non-convertible 16 per cent taxable bonds and 5,00,000 secured redeemable non-convertible 10.5 per cent tax-free bonds of Rs 1,000 each at par aggregating Rs 250 crore. The former are redeemable at par after five years with the company offering to buy back at par after three years from the date of allotment while the latter are redeemable at par after seven years with the company offering to buy back at par after two years from the date of allotment. The buy-back facility will be on a first-cum-first- served basis and will be open only to individual bond-holders up to a face value of Rs 40,000 provided the bonds are held for a continuous period of one year. The issue which involves a minimum application of Rs 5,000 will open for subs cription on January 7 and close on January 21, 1994.

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