The Telangana government’s attempt to secure a substantial loan from the Indian Railway Finance Corporation (IRFC) to acquire the 69.2-km Hyderabad Metro Rail (HMR) Phase I from L&T Metro Rail Hyderabad (L&TMRH) is facing multiple financial, regulatory and institutional hurdles, officials familiar with the discussions said.
The proposal centres on a ₹15,000-crore transaction, including a ₹13,000-crore debt component and a ₹2,000-crore equity payout. However, key aspects of the financing remain unclear, particularly the nature of sovereign guarantees, compliance with Reserve Bank of India (RBI) borrowing norms and the willingness of all stakeholders to segregate equity and debt.
Senior officials said the IRFC loan is likely to be structured as a mix of Yen-denominated and Rupee borrowings, each carrying different interest rates. This means the entire loan may not be available at a uniform rate of 3.5%. Any external commercial borrowing would also require RBI clearance, adding another layer of scrutiny to the process.
The government now has a narrow window of about a fortnight to complete the takeover within the extended deadline. Before that, it must finalise guarantees, secure regulatory approvals and ensure adequate liquidity to close the deal. The task is further complicated by the delay in the final report from financial adviser IDBI Capital, even as negotiations continue.
