21-I-0059
December 8, 2021

Japan Credit Rating Agency, Ltd. (JCR) announces the following credit rating.

Indian Railway Finance Corporation Limited (security code: -)<Affirmation>
Foreign Currency Long-term Issuer Rating:
Outlook:
Local Currency Long-term Issuer Rating:
Outlook:

BBB+
StableBBB+
StableRationale(1) Indian Railway Finance Corporation (IRFC) is a public financial institution founded under the country’s
Ministry of Railway (MOR) in 1986. Its primary function is to raise funds needed for the purchase ofrailway-related assets such as rolling stock used by the Indian Railways, a core segment of MOR,
through lease financing. The ratings on IRFC strongly reflect the long-term issuer ratings (FC:
BBB+/Stable and LC: BBB+/Stable) of the Government of India (GOI) based on, among others: (i) its
strong capital and personnel relationships with GOI, (ii) government support and de facto revenue
assurances as stipulated in a lease agreement, (iii) assured quality of assets leased only to MOR and(iv) its importance in GOI's industrial policy on railway operations.
(2) IRFC has solid personnel relationships with GOI as exemplified by the fact that its chairman is
concurrently served by a senior MOR official and that members of its Board of Directors are appointed
by GOI. IRFC had been 100% owned by GOI. However, under its Union Budget for fiscal 2017/18,
GOI announced a policy to conduct an IPO of some shares of the public enterprises affiliated with
MOR including IRFC in order to improve accountability and upgrade corporate value. The IPO, which
had been delayed, was carried out on January 18-20, 2021. The total amount of the IPO was INR
46.33 billion and GOI's shareholding ratio after the IPO was brought down to 86%. With GOI
committed to keep holding more than 75% of IRFC's shares, JCR believes that their strong
relationship will be retained in the future.
(3) In actual operations, MOR purchases rolling stock based on the plans worked out by the IndianRailways. IRFC then purchases those assets from MOR and leases them back to MOR. In doing so,
IRFC procures the funds needed for the purchase from the capital market and pays them to MOR. A
standard lease agreement IRFC concludes with MOR is normally effective for 30 years and stipulates
the lease rentals to be set to cover the cost of funds plus a prescribed margin. In addition, the paymentof principal and interest on lease obligations by MOR is provided for in the Union budget, which is
required to be approved by Parliament. These assure the profitability of IRFC's lease receivables. In
fact, its ROA based on net profit has been staying stable at around mid-1% in recent years. The leaseagreement stipulates that MOR shall pay lease rentals in advance when IRFC faces difficulties inrepaying its own debt. However, this clause has never been invoked by IRFC since its inception.
(4) IRFC’s total assets have been on the increase, reaching INR 3.78 trillion (approximately JPY 5.7
trillion) at the end of fiscal 2020/21, up 37.2% from the year before. Particularly contributing to the
expansion of assets in recent years is lease receivables related to MOR's railway infrastructurebuildup plan. The lessee here is exclusively MOR, which means that the quality of assets is quite
stable. IRFC's financial base also stays stable even amid a substantial increase of its borrowings inline with the expansion of assets thanks to GOI's continuing capital injection. Its capital adequacy
ratio stands at about 9.5%, with its D/E ratio kept at around 9 times, well below the 10 times or lessas defined by its internal rules. IRFC’s borrowings may increase further in the future in keeping withthe expansion of railway operations in India. Therefore, a stable profit accumulation and a continued
capital increase will be essential for IRFC to maintain its sound financial position. The government
continues its support as evidenced by the increase of IRFC’s authorized share capital in fiscal
2020/21. JCR will watch a further capital injection in the future.
Atsushi Masuda, Hiroshi Tonegawa

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Copyright © Japan Credit Rating Agency, Ltd. All Rights Reserved.

Rating
Issuer: Indian Railway Finance Corporation Limited<Affirmation>
Foreign Currency Long-term Issuer Rating: BBB+
Local Currency Long-term Issuer Rating : BBB+

Outlook: Stable
Outlook: Stable

Rating Assignment Date: December 3, 2021
The assumptions for the credit ratings and the definitions of the rating symbols are published as "Types of Credit Ratings and Definitionsof Rating Symbols" (January 6, 2014) in Information about JCR Ratings on JCR's website (https://www.jcr.co.jp/en/).
Outline of the rating methodology is shown as "Sovereign and Public Sector Entities" (October 1, 2021) and “Leasing” (July 1,2013) in Information about JCR Ratings on JCR's website (https://www.jcr.co.jp/en/).

Japan Credit Rating Agency, Ltd.
Jiji Press Building, 5-15-8 Ginza, Chuo-ku, Tokyo 104-0061, Japan
Tel. +81 3 3544 7013, Fax. +81 3 3544 7026
Information herein has been obtained by JCR from the issuers and other sources believed to be accurate and reliable. However, because of the possibility of human or mechanical error as well as other factors,
JCR makes no representation or warranty, express or implied, as to accuracy, results, adequacy, timeliness, completeness or merchantability, or fitness for any particular purpose, with respect to any suchinformation, and is not responsible for any errors or omissions, or for results obtained from the use of such information. Under no circumstances will JCR be liable for any special, indirect, incidental orconsequential damages of any kind caused by the use of any such information, including but not limited to, lost opportunity or lost money, whether in contract, tort, strict liability or otherwise, and whether
such damages are foreseeable or unforeseeable. JCR's ratings and credit assessments are statements of JCR's current and comprehensive opinion regarding redemption possibility, etc. of financial obligations
assumed by the issuers or financial products, and not statements of opinion regarding any risk other than credit risk, such as market liquidity risk or price fluctuation risk. JCR's ratings and credit assessments
are statements of opinion, and not statements of fact as to credit risk decisions or recommendations regarding decisions to purchase, sell or hold any securities such as individual bonds or commercial paper.
The ratings and credit assessments may be changed, suspended or withdrawn as a result of changes in or unavailability of information as well as other factors. JCR receives a rating fee paid by issuers for
conducting rating services in principle. JCR retains all rights pertaining to this document, including JCR's rating data. Any reproduction, adaptation, alteration, etc. of this document, including such rating
data, is prohibited, whether or not wholly or partly, without prior consent of JCR.
JCR is registered as a "Nationally Recognized Statistical Rating Organization" with the U.S. Securities and Exchange Commission with respect to the following four classes. (1) Financial institutions, brokers
and dealers, (2) Insurance Companies, (3) Corporate Issuers, (4) Issuers of government securities, municipal securities and foreign government securities.
JCR publishes its press releases regarding the rating actions both in Japanese and in English on the same day. In case that it takes time to translate rating rationale, JCR may publicize the summary version,
which will be replaced by the full translated version within three business days. (Regarding Structured Finance products, JCR only publicize the summary version in English.)

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Copyright © Japan Credit Rating Agency, Ltd. All Rights Reserved.

I n f o r m at i o n D i s c l o s u r e F o r mJapan Credit Rating Agency, Ltd.

Disclosure Required by Paragraph (a)(1)(ii) of Rule 17g-7

1

Issuer:Indian Railway Finance Corporation Limited

Rating Publication
Date:

December 8, 2021

The Symbol, Number, or Score in the Rating Scale used to Denote Credit Rating Categories andNotches and, the Identity of the Obligor or the Identity and a Description of the Security or Money
Market Instrument as Required by Paragraph (a)(1)(ii)(A) of Rule 17g-7
Please see the news release. If the credit rating is a private rating, please see the report for private
rating.

2

The version of the procedure or methodology used to determine the credit rating; as Required by
Paragraph (a)(1)(ii)(B) of Rule 17g-7
Please see the news release. If the credit rating is a private rating, please see the report for private
rating.

3

The Main Assumptions and Principles used in Constructing the Procedures and Methodologies
used to Determine the Credit Rating as Required by Paragraph (a)(1)(ii)(C) of Rule 17g-7
The credit rating methodology assumes, in principle, to be applied to assess the likelihood of agiven debt payment in light of its issuer’s condition and business environment, etc. in the relevant
future. There is certain limitation, however, in the time horizon that the rating foresees.
The credit rating methodology assumes, in principle, that the factors posted in the below areparticularly important for such likelihood to be determined, and that the rating determination ismade by evaluating each of them not only quantitatively but also employing qualitative analyses.

A) Legal Protection and Support Provided by the Government
The likelihood of a given debt payment is highly conditional to the issuer’s legal protection provided
by the government, personnel and capital relationship with the government, importance in thegovernment’s policy, credit enhancement, and other forms of the government’s supporting policy,
framework and the strength thereof.

B) Business Bases
The likelihood of a given debt payment is highly conditional to its issuer’s business bases - how they
can be maintained/ expanded into the future and thereby secure earnings and cash flows in adequacy
and in a sustainable way.

1/5C) Financial Grounds and Asset Quality
The likelihood of debt payment is highly dependent on the degree of the issuer’s indebtedness and loss
absorption capacity in terms of equity capital. Also notable is that a financial institution might see asignificant loss of financial grounds as a result of changes in value of the assets under its possession.
D) Liquidity Positions
The likelihood of debt payment is highly dependent on the adequacy of the issuer’s cash and othersources of repayment (liquidity positions).
E) Order of Seniority in Debt Payment
The likelihood of debt payment can be different between given debts of the same issuer. The
likelihood of debt payment for an individual debt is dependent on the issuer’s discretion, and/ or its
rank relative to other debts of the same issuer in the order of seniority in principal/ interest payment
which is determined by design as financial product or by laws, etc.

4

The Potential Limitations of the Credit Rating as Required by Paragraph (a)(1)(ii)(D) of Rule 17g-7
The credit rating herewith presented by JCR is its summary opinion with regard to the likelihood ofgiven debt payment and hence not necessarily a perfect representation of such likelihood. The credit
rating is not intended to estimate the probability of default or the loss on given default, either.
The objective of the credit rating herewith presented does not include any concerns other than thelikelihood of debt payment, such as risks of price changes, market liquidity, etc.
The credit rating herewith presented is necessary to be reviewed along with possible changes of theissuer of rated objects in its business performance and/ or circumstances which include regulatoryenvironment, and hence subject to possible alteration.

5

Information on the Uncertainty of the Credit Rating as Required by Paragraph (a)(1)(ii)(E) of Rule
17g-7
The information used for the determination of credit rating as herewith presented is obtained by
JCR from the issuer of rated objects and other sources that JCR trusts in terms of accuracy andreliability but possibly contains errors due to human, non-human or other causes. Consequently, thecredit rating determined on the grounds of such information does not constitute, explicitly or
implicitly, any representation or warrant of JCR on the information itself or any consequences of its
use in terms of accuracy, relevance, timeliness, wholeness, market value, or usefulness for any
specific purposes.

6

Use of Due Diligence Services of a Third Party in Taking the Rating Action as Required by Paragraph(a)(1)(ii)(F) of Rule 17g-7
There is no use of any third-party due diligence service in the determination of the credit ratingherewith presented.

7

Use of Servicer or Remittance Reports to Conduct Surveillance of the Credit Rating Required by
Paragraph (a)(1)(ii)(G) of Rule 17g-7
There is no use of any servicer or remittance report to conduct surveillance of the credit ratingherewith presented.

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8

The Types of Data Relied Upon for the Purpose of Determining the Credit Rating as Required by
Paragraph (a)(1)(ii)(H) of Rule17g-7
The information posted in the below, which includes data, is used for the determination of the credit
rating herewith presented.
A) Audited financial statements presented by the rating stakeholders
B) Explanations of business performance, management plans, etc. presented by the rating stakeholders

9Overall assessment of the Quality of Information Available and Considered in Determining theCredit Rating as Required by Paragraph (a)(1)(ii)(l) of Rule 17g-7
JCR holds its basic policies for securing the quality of information as a base of due diligence for thedetermination of credit ratings. The information used as a base for the determination of credit ratingherewith presented satisfies such policies, which include the audit by an independent auditor, thepublication by the issuer, some independent media or, otherwise, JCR analyst’s scrutiny, etc.
JCR sees no particular weakness in the quality of information used for the determination of thecredit rating herewith presented as compared to the information used in other cases of the credit
rating for comparable issuers or ratable objects.
If the credit rating is an Indication, please see the report for Indication.

10 Information Relating to Conflicts of Interest as Required by Paragraph (a)(1)(ii)(J) of Rule 17g-7
JCR receives payment of compensation for the determination of the credit rating herewith presented
from either one of those parties who are issuer, underwriter, depositor or sponsor.
JCR did not receive in the last fiscal year in the past payment of compensation from the same party
for any kind of JCR’s service other than the determination of public or private credit rating, such as
one in the ancillary business.

or Measure of the Potential Volatility of the Credit Rating as Required by Paragraph
11 Explanation(a)(1)(ii)(K) of Rule 17g-7
A) Legal Protection and Support Provided by the Government
The credit rating is subject to alteration if there is a change in the issuer’s legal support by thegovernment, personnel or capital relationship with the government, importance in the government’s
policy, credit enhancement and other forms of the government’s supporting policy, framework and thestrength thereof. The resultant alteration of the credit rating is usually by a notch, with possibility of afew notches if and when the change is large.
B) Business Bases
The credit rating is subject to alteration if there is improvement or deterioration of the issuer’s
business bases, since its revenue, etc. may improve or deteriorate by the change in its business
management policies, clients’ preferences, competitive situation, or a technological innovation. The
resultant alteration of the credit rating is usually by a notch, with possibility of a few notches if andwhen the change in the business bases is large.
C) Financial Grounds and Asset Quality
The credit rating is subject to alteration if the issuer increases/ decreases its debt/ capital or vice versa
and thereby makes its individual debt payment liability less or more bearable and its loss absorption
capacity into the future decreased or increased. Also, the changes in the quality of asset under the

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issuer’s holding may affect the credit rating, since such changes could raise or lower the likelihood of
future loss of the issuer’s financial grounds. The resultant alteration of the credit rating is usually by anotch, with possibility of a few notches if and when the change in the financial grounds and/ or asset
quality is large.

D) Liquidity Positions
The credit rating is subject to alteration if there is a change in the issuer’s financial management
policy or in the relations with fund procurement sources and the change thereby makes its liquidity
positions improve or deteriorate. The resultant alteration of the credit rating is usually by a notch, withpossibility of a few notches if and when the change is large.
E) Order of Seniority in Debt Payment and Non-Payment Forgiven by Contract
The credit rating is subject to alteration if there is a change in the rated debt’s status in the order ofseniority relative to other debts caused by the improvement/ deterioration of the issuer’s financial
condition. The resultant alteration of the credit rating is usually a notch, with possibility of a few
notches if and when the change is large. Also, in case of the financial products for which non-payment
of interest/ principal is contractually permissible, the credit rating is subject to alteration if and when
the likelihood of such non-payment is projected to increase or decrease. The resultant alteration of thecredit rating could be by a notch but often as much as a few notches.
F) Creditworthiness of the Government, etc. that Constitute the Framework of Credit Enhancement
The credit rating is subject to alteration if there is a change in the creditworthiness of the government,
etc. that constitute the framework of credit enhancement. The resultant alteration of the credit rating is
usually a notch, with possibility of a few notches if and when the change on such framework is
exceptionally large.
G) Rise and Fall in General Economy and Markets
The credit rating is subject to alteration if there is a rise/ fall in the general economy and/ or themarkets inducing the issuer’s revenues/ expenses to increase/ decrease and vice versa, etc. The
resultant alteration of the credit rating is usually by a notch, with possibility of a few notches if andwhen the change is exceptionally large.
H) Various Events
The credit rating is subject to alteration on occurrence of various events, such as change in the issuer’s
major shareholders, M&A and other organizational change, accident, violation of the law, litigation,legal/ regulatory change, natural disaster, etc., which are unforeseeable at the time when the credit
rating is determined, causing a significant change on the issuer’s business bases, financial grounds, etc.
The resultant alteration of the credit rating could be by a notch but more often than not as much as afew notches.

12

Information on the Content of the Credit Rating, Including the Historical Performance of the Credit
Rating and the Expected Probability of Default and the Expected Loss in the Event of Default as
Required by Paragraph (a)(1)(ii)(L) of Rule 17g-7
Historical records of the credit rating herewith presented are posted in the end of this paper.
The credit rating herewith presented by JCR is its summary opinion with regard to the likelihood ofgiven debt payment and hence not necessarily a perfect representation of such likelihood. The credit
rating is not intended to estimate the probability of default or the loss on given default, either.
Facts of the probability of default are posted as Form NRSRO Exhibit 1 on the JCR website under
the URL:
https://www.jcr.co.jp/en/service/company/regu/nrsro/on the Sensitivity of the Credit Rating to Assumptions Made as Required by Paragraph
13 Information(a)(1)(ii)(M) of Rule 17g-7
A) Legal Protection and Government Support
The credit rating herewith presented could be changed if and when the assumptions made at the timeof its determination turn out to be inaccurate with regard to the issuer’s legal protection provided by

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the government, personnel and capital relationship with the government, importance in thegovernment’s policy, credit enhancement and other forms of the government’s supporting policy,
framework and the strength thereof. The resultant change of the credit rating is most likely by one
notch, as JCR stipulates, but possibly as much as a few notches if the change in the government’s
supporting policy is significant.

B) Business Bases
The credit rating herewith presented could be changed if and when the assumptions made at the timeof its determination turn out to be inaccurate with regard to the issuer’s business bases and powers ofearning or cash flow generation, etc. The resultant change of the credit rating is most likely by a notch,
as JCR speculates, but possibly as much as a few notches if the development is rapid in improvement
or deterioration of the issuer’s business bases on some drastic change in the operational environments,
etc.
C) Financial Grounds and Asset Quality
The credit rating herewith presented could be changed if and when the assumptions made at the timeof its determination turn out to be inaccurate with regard to the issuer’s financial grounds and asset
quality. The resultant change of the credit rating is most likely by a notch, as JCR speculates, but
possibly as much as a few notches if the development is rapid in improvement or deterioration of theissuer’s financial grounds and/ or asset quality on some drastic change in its business bases.
D) Creditworthiness of the Government, etc. that Constitute the Framework of Credit Enhancement
The credit rating herewith presented could be changed if and when the assumptions made at the timeof its determination turn out to be inaccurate with regard to the creditworthiness of the government,
etc. that constitute the framework of credit enhancement. JCR assumes the resultant change of thecredit rating is most likely by a notch. The change could be as much as a few notches should thecreditworthiness of said government, etc. change so greatly.
E) Rise and Fall in General Economy and Markets
The credit rating herewith presented could be changed if and when the assumptions made at the timeof its determination turn out to be inaccurate with regard to the prospects of general economy andmarkets. JCR expects the change should be most likely by a notch but could be as much as a few
notches, should the economy or the markets change so greatly.
on the Representations, Warranties, and Enforcement Mechanisms of an Asset14 Information
backed Security as Required by Paragraph (a)(1)(ii)(N) of rule 17g-7
The credit rating herewith presented is not for an ABS product, and hence no relevant issue.

Japan Credit Rating Agency, Ltd.
Jiji Press Building, 5-15-8 Ginza, Chuo-ku, Tokyo 104-0061, Japan
Tel. +81 3 3544 7013, Fax. +81 3 3544 7026

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The Historical Performance of the Credit Rating
Issuer Name

Indian Railway FinanceCorporation Ltd.
Indian Railway FinanceCorporation Ltd.
Indian Railway FinanceCorporation Ltd.
Indian Railway FinanceCorporation Ltd.
Indian Railway FinanceCorporation Ltd.
Indian Railway FinanceCorporation Ltd.
Indian Railway FinanceCorporation Ltd.
Indian Railway FinanceCorporation Ltd.
Indian Railway FinanceCorporation Ltd.
Indian Railway FinanceCorporation Ltd.
Indian Railway FinanceCorporation Ltd.
Indian Railway FinanceCorporation Ltd.
Indian Railway FinanceCorporation Ltd.
Indian Railway FinanceCorporation Ltd.
Indian Railway FinanceCorporation Ltd.
Indian Railway FinanceCorporation Ltd.
Indian Railway FinanceCorporation Ltd.
Indian Railway FinanceCorporation Ltd.
Indian Railway FinanceCorporation Ltd.
Indian Railway FinanceCorporation Ltd.
Indian Railway FinanceCorporation Ltd.
Indian Railway FinanceCorporation Ltd.
Indian Railway FinanceCorporation Ltd.
Indian Railway FinanceCorporation Ltd.
Indian Railway FinanceCorporation Ltd.
Indian Railway FinanceCorporation Ltd.
Indian Railway FinanceCorporation Ltd.
Indian Railway FinanceCorporation Ltd.
Indian Railway FinanceCorporation Ltd.
Indian Railway FinanceCorporation Ltd.

Issue Name

Publication Date

RatingOutlook/Direction

Issuer(Long-term)(FC)

January 30, 2007

BBB

Positive

Issuer(Long-term)(FC)

August 2, 2007

BBB+

StableIssuer(Long-term)(FC)

February 29, 2008

BBB+

StableIssuer(Long-term)(FC)

April 9, 2009

BBB+

StableIssuer(Long-term)(FC)

March 5, 2010

BBB+

StableIssuer(Long-term)(FC)

February 23, 2011

BBB+

StableIssuer(Long-term)(FC)

March 9, 2012

BBB+

StableIssuer(Long-term)(FC)

March 22, 2013

BBB+

StableIssuer(Long-term)(FC)

December 13, 2013

BBB+

Negative

Issuer(Long-term)(FC)

February 13, 2015

BBB+

StableIssuer(Long-term)(FC)

February 24, 2016

BBB+

StableIssuer(Long-term)(FC)

January 30, 2017

BBB+

StableIssuer(Long-term)(FC)

October 25, 2017

BBB+

StableIssuer(Long-term)(FC)

January 31, 2019

BBB+

StableIssuer(Long-term)(FC)

January 30, 2020

BBB+

StableIssuer(Long-term)(FC)

April 6, 2021

BBB+

StableIssuer(Long-term)(LC)

January 30, 2007

BBB

Positive

Issuer(Long-term)(LC)

August 2, 2007

BBB+

StableIssuer(Long-term)(LC)

February 29, 2008

BBB+

StableIssuer(Long-term)(LC)

April 9, 2009

BBB+

StableIssuer(Long-term)(LC)

March 5, 2010

BBB+

StableIssuer(Long-term)(LC)

February 23, 2011

BBB+

StableIssuer(Long-term)(LC)

March 9, 2012

BBB+

StableIssuer(Long-term)(LC)

March 22, 2013

BBB+

StableIssuer(Long-term)(LC)

December 13, 2013

BBB+

Negative

Issuer(Long-term)(LC)

February 13, 2015

BBB+

StableIssuer(Long-term)(LC)

February 24, 2016

BBB+

StableIssuer(Long-term)(LC)

January 30, 2017

BBB+

StableIssuer(Long-term)(LC)

October 25, 2017

BBB+

StableIssuer(Long-term)(LC)

January 31, 2019

BBB+

Stable1/2

The Historical Performance of the Credit Rating
Issuer Name

Indian Railway FinanceCorporation Ltd.
Indian Railway FinanceCorporation Ltd.

Issue Name

Publication Date

RatingOutlook/Direction

Issuer(Long-term)(LC)

January 30, 2020

BBB+

StableIssuer(Long-term)(LC)

April 6, 2021

BBB+

Stable2/2Attachment

Attestation Required by Paragraph (a)(1)(iii) of Rule 17g-7

I, Toshihiko Naito, have responsibility to this Rating Action and to the best of my knowledge:

A) No part of the credit rating was influenced by any other business activities.
B) The credit rating was based solely upon the merits of the obligor, security, or money market
instrument being rated.
C) The credit rating was an independent evaluation of the credit risk of the obligor, security, or
money market instrument.

Japan Credit Rating Agency, Ltd.
Jiji Press Building, 5-15-8 Ginza, Chuo-ku, Tokyo 104-0061, Japan
Tel. +81 3 3544 7013, Fax. +81 3 3544 7026