Indian Railway Finance Corporation Ltd. (IRFC) signed a Rs 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 on May 25, 2026. This transaction marks a significant development in India's urban transit sector, replacing higher-cost debt with competitively priced long-term rupee financing. The agreement was signed in the presence of IRFC CMD & CEO Manoj Kumar Dubey and Telangana Chief Secretary K. Ramakrishna Rao, highlighting the strategic importance of the deal for strengthening urban mobility infrastructure.

The refinancing facility is structured over a 20-year tenure with quarterly repayments. It carries no processing fees, commitment charges, or prepayment penalties, making it an efficient mechanism for the borrower. The transaction is supported by a robust credit enhancement framework, including an unconditional and irrevocable undertaking by the Government of Telangana for servicing all dues payable to IRFC, a state government guarantee, and an RBI-backed direct debit mandate.

Key Transaction Details

The facility will refinance existing debt obligations, including non-convertible debentures (NCDs), commercial papers, and term loans. This enables an orderly exit for existing lenders while improving the project's long-term financial sustainability. The refinancing follows the transfer of 100 per cent ownership of L&TMRHL from Larsen & Toubro Limited to the Government of Telangana through Hyderabad Metro Rail Limited (HMRL).

Project Overview

Hyderabad Metro Rail Phase-I spans 69.2 kilometres across three corridors with 57 stations. It is among the world's largest metro rail projects developed under the public-private partnership (PPP) model. The network currently caters to over 5 lakh passenger journeys daily and serves as a critical urban transport backbone for the city.

CMD & CEO Manoj Kumar Dubey stated that the transaction reinforces IRFC's capability to structure innovative, long-tenor financing solutions for nationally significant infrastructure assets. He emphasized that IRFC stands ready to serve as a trusted domestic financing partner, channeling Indian savings into India’s infrastructure on Indian terms. The refinancing is expected to materially strengthen the project’s financial flexibility, enabling the Government of Telangana to accelerate the planned expansion of Hyderabad’s metro network.

The Indian government is reportedly planning to further reduce its stake in Indian Railway Finance Corporation , according to a report by NDTV Profit. This development points to continued divestment activity by the government in the public sector financing entity.

Government Divestment in IRFC

The report indicates that the government intends to proceed with an additional stake reduction in IRFC, continuing its broader divestment agenda in state-owned enterprises. IRFC serves as the dedicated financing arm of Indian Railways, primarily raising funds from domestic and overseas capital markets to finance the acquisition of rolling stock assets and project assets of Indian Railways.

Key Development

Further details regarding the specific quantum of stake to be divested, the proposed mechanism, or the timeline for the transaction have not been provided in the available information at this time.