The government finance companies established in India are poised to grow rapidly in the financial year 2025. With significant developments in various areas, policy decisions, infrastructure initiatives, and strategic funding plans, public sector finance companies aim to improve their offerings and deliver value to their customers. Indian Railway Finance Corporation IRFC and the Indian Renewable Energy Department Agency IREDA are the two prominent entities in the government financial landscape making strides through consistent initiatives. The following article explores the various policy initiatives and overall outlook of the government finance companies which investors must be aware of:
Policy initiatives and regulatory changes
- The Reserve Bank of India through a policy change has reduced the risk weight requirements for consumers and micro finance loans to NBFCs by 25 basis points. This in turn lays a strong and better ground work for bank funding making short-term commercial loans less attractive when compared with stable bank loans.
- A liquidity surplus in the overall banking system through bond purchases will be ensured to deliver strength to the banking system and support the economic growth of the common finance companies.
Indian Railway Finance Corporation
IRFC serving as a dedicated financial arm for the Indian Railways in procuring funds for infrastructure development and improvement is making all the necessary efforts to improve its financing initiatives. Working with the associated government departments, the government finance company aims to improve the overall electrification, high-speed corridor, and network decongestion Base projects by opting for strategic fundraising methods. Moreover, under the strategic financial planning goal of IRFC, the government plans to undertake essential capital-intensive projects with greater efficiency and with limited financial constraints. The strong initiatives by IRFC can be easily witnessed in the stable IRFC share price.
Indian Renewable Energy Development Agency
IREDA serves as a leading government finance company engaged in procuring funds for the development of the renewable energy sector of India. With an ambitious fundraising project, IREDE plans to raise funds of more than ₹25,000 crores through various means like debt. An additional amount of ₹4500 crores will be sourced through equity as well. An FPO is in the pipeline as well allowing IREDA to work independently of the government providing better independence in fundraising projects. Moreover, the Govt finance company aims to diversify its fundraising sources beyond its domestic institutions. Overseas borrowing and lending along with global green financing certain other projects that the company aims towards.
Maintaining an adequate capital adequacy ratio and low NPA, IREDA has been able to maintain overall business stability. Moreover, according to popular analysts, the IREDA share price is bound to improve in the financial year 2025 due to consistent efforts from the company itself and continued support from the government.
Conclusion
Govt finance companies like IRFC and IREDA are essential and instrumental to raising capital from various sources. Through strong efforts, a stable business outlook, and strategic partnerships with national and international companies, government finance companies will surely play a strategic role in driving India’s sustainable economic growth. For the financial year 2025, government finance companies including IRFC and IREDA will foster sustainable growth making them a crucial sector that investors must analyse for investment.
(DISCLAIMER: The information in this article does not necessarily reflect the views of The Global Hues. We make no representation or warranty of any kind, express or implied, regarding the accuracy, adequacy, validity, reliability, availability or completeness of any information in this article.)
