MoCA’s exemption enables IRFC to raise debt over Rs 630 billion

The Ministry of Corporate Affairs has exempted government companies notified as public financial institutions, registered as non-banking financial companies with the Reserve Bank of India, and in the business of infrastructure finance leasing with 75 per cent of their revenue coming from government-owned or controlled entities, from the provisions of the Indian Accounting Standard 12 that deals with deferred tax liability (DTL), for a period of seven years. This exemption will primarily benefit the Indian Railway Finance Corporation (IRFC) which is responsible for meeting a large portion of the railways’ extra-budgetary resource requirements through its financial leasing model. As of March 2017, the corporation’s cumulated DTL stood at Rs 63.92 billion. With the new provision, IRFC will now be able to raise additional debt to the tune of over Rs 630 billion.