DFCCIL: $100M loan for rail corridor expansion from MUFG Bank

11 Aug 2023 CW Team

Dedicated Freight Corridor Corporation of India Ltd (DFCCIL) has successfully secured a significant milestone in its expansion efforts. The corporation, responsible for developing and managing freight rail corridors across India, has raised $100 million through an external commercial borrowing (ECB) loan from MUFG Bank Ltd, a prominent Japanese financial institution.

This landmark transaction holds additional significance due to its credit enhancement, backed by the Multilateral Investment Guarantee Agency (MIGA), a member of the World Bank Group. MUFG Bank expressed its excitement for this deal, stating that it will be executed through their GIFT branch. The financing arrangement not only represents DFCCIL's inaugural commercial funding but also marks a debut MIGA-covered transaction within India.

DFCCIL, under the governance of the Indian government, is dedicated to transforming the nation's freight transportation landscape. By constructing and overseeing specialised rail corridors, the corporation aims to alleviate congestion in existing transportation networks while fostering enhanced, efficient, and sustainable transport infrastructure.

Shashank Joshi, Deputy CEO of MUFG India, emphasised that this financing model could potentially set a precedent for innovative funding solutions, propelling India's infrastructure development endeavours. MIGA, a subsidiary of the World Bank, specialises in providing political risk insurance and credit enhancement solutions for diverse projects.

Hira Ballabh, Director of Finance at DFCCIL, emphasised the transformative potential of this loan. He indicated that beyond its immediate impact, the financing could create a new avenue for funding large-scale infrastructure projects and other enterprises within the country. This collaborative effort between DFCCIL, MUFG Bank, and MIGA signals a promising stride toward fostering India's economic growth and advancement.

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