Indian Railway Finance Corporation (IRFC) has signed a ₹13,527 crore term loan agreement with L&T Metro Rail (Hyderabad) Limited and Hyderabad Metro Rail Limited for refinancing the Hyderabad Metro Rail project, in one of India’s largest urban transit refinancing transactions.
The agreement, signed on Monday, 25 May, comes against the backdrop of Telangana’s move to take full control of Hyderabad Metro Phase-I from Larsen & Toubro and restructure the project’s debt burden.
The agreement was signed in the presence of IRFC Chairman and Managing Director Manoj Kumar Dubey, Telangana Chief Secretary K Ramakrishna Rao, HMRL Managing Director Sarfaraz Ahmad, IRFC Director (Finance) – Additional Charge Randhir Sahay, IRFC Executive Director (Finance) Deepa Kotnis and senior officials from IRFC, HMRL and L&T Metro Rail (Hyderabad) Limited.
According to IRFC, the transaction marks a major step in its expanding role in financing strategically important public infrastructure projects and sustainable urban mobility initiatives.
The refinancing is linked to Hyderabad Metro Rail Phase-I, which spans 69.2 Km across 3 corridors and 57 stations. The network currently serves more than 5 lakh passenger journeys every day.
Hyderabad Metro Phase-I is among the world’s largest metro rail projects developed under the public-private partnership model.
The project was developed by L&T Metro Rail (Hyderabad) Limited, while Hyderabad Metro Rail Limited is the nodal agency of the Telangana government.
According to reports, the loan will be used to refinance existing liabilities, including non-convertible debentures, commercial papers and other borrowings. The structure is expected to replace higher-cost debt with a longer-term, lower-cost rupee loan.
The refinancing package is reportedly spread over 20 years and is backed by credit enhancement features, including a state government guarantee.
The debt reset is expected to improve the project’s financial sustainability and provide a smoother exit path for existing lenders.
The transaction is also tied to the Telangana government’s wider plan to bring Hyderabad Metro Phase-I fully under state control.
The state government recently acquired L&T’s stake in the project for an equity value of ₹1,461.47 crore, while also taking responsibility for refinancing existing debt of about ₹13,538.53 crore.
That would take the broader transaction value close to ₹15,000 crore.
The move is significant because Hyderabad Metro has been a major test case for India’s PPP-led metro model.
For Telangana, the debt restructuring is also linked to future metro expansion. The takeover of Phase-I is expected to help clear the way for the next stage of expansion, including proposed corridors towards Shamshabad, Bharat Future City and other parts of the Hyderabad metropolitan region.
The Phase-II expansion proposals include sections of 76.4 Km and 86.1 Km, taking the planned network well beyond the existing 69.2 Km Phase-I system.
