IRFC inks ₹13,527 crore refinancing deal for Hyderabad Metro, boosting urban rail funding.

The Indian Railway Finance Corporation Ltd. (IRFC), a Navratna Central Public Sector Enterprise under the Ministry of Railways, on Monday 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 deal marks a landmark refinancing transaction in India’s urban transit sector.

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

Following the transaction, IRFC said it continues to evolve into a diversified infrastructure financing institution, while leveraging its core strength in long-term transportation finance. The move aligns with the Government of India’s broader vision of “Viksit Bharat,” focused on expanding and modernising infrastructure across the country.

In a statement, Dubey said the transaction reinforces IRFC’s ability to structure innovative, long-tenor financing solutions for nationally significant infrastructure assets. “It also reinforces our commitment to supporting sustainable urban mobility through efficient capital mobilisation,” he added.

The refinancing comes after the transfer of 100% 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 placed the metro network under state ownership, strengthening its position as a strategic public mobility asset and supporting future expansion plans.

The facility will be used to refinance existing debt obligations, including non-convertible debentures (NCDs), commercial papers, and term loans. It is expected to provide an orderly exit for existing lenders while improving the project’s long-term financial sustainability.

Hyderabad Metro Rail Phase-I spans 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 handles over 5 lakh passenger journeys daily and serves as a key backbone of urban transport in the city.

Officials said the refinancing will help strengthen financial flexibility and support the planned expansion of the metro network into emerging growth corridors. This includes improving capacity, extending coverage, and enhancing last-mile connectivity across the Hyderabad metropolitan region.

The 20-year facility, structured with quarterly repayments, replaces higher-cost debt with competitively priced long-term rupee financing. It carries no processing fees, commitment charges, or prepayment penalties, making it a cost-efficient refinancing structure.

The transaction is backed by a credit enhancement framework that includes 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 noted that the deal demonstrates how large-scale urban infrastructure can be financed domestically through long-tenor structures aligned with project cash flows. He said IRFC remains committed to channeling domestic savings into infrastructure development through sustainable financing models.

With strong sovereign backing, a solid credit profile, and a zero-NPA track record, IRFC said it is well positioned to support metro rail systems and other major public infrastructure projects across India.

The refinancing is expected to improve the financial stability of the Hyderabad Metro project and provide the Government of Telangana with greater flexibility to accelerate future expansion, including new corridors and enhanced connectivity. It also establishes a potential template for urban transit financing in other parts of the country as India continues to invest in sustainable and integrated mobility solutions.

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