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IRFC – the beginning of a green era

Ashutosh Dash (Department of Accounting and Finance, Management Development Institute, Gurgaon, India)

Publication date: 22 May 2021


Learning outcomes

The learning outcomes of this paper is as follows: to review the basic differences between the two evolving bonds, i.e. green vs masala bonds in the Indian capital market; to comprehend the factors that need to be considered in deciding the type of bond to be issued; to assess complexities, such as process, timing, risk and location in relation to the issue of the green bonds; and to understanding the rudiments of bond economics, such as pricing, all-in-cost and yield-to-maturity of bonds and make a comparison of all-in-cost of the Reg-S bond and green bond to Indian Railway Finance Corporation (IRFC).

Case overview/synopsis

In September 2017, IRFC, a public sector undertaking registered as a Non-Banking Finance Company with Reserve Bank of India under the administrative control of the Ministry of Railways, was planning to raise US$500m 10-year green bonds from investors in Asia, Europe and the Middle East. The green bond proceeds were proposed to be used for low carbon transport and in this way, contribute significantly to the green initiatives of the Indian Railways. Many companies in India had issued regular bonds without labeling them as green but had used the proceeds of the bond for climate-aligned assets. Therefore, a bigger challenge before the IRFC management was the economics of green bond for getting a nod from the Board of Governors to go ahead. Some preliminary estimates on cost of green bonds were received from few bankers but to see that the terms of green bonds are met eventually, the Director (Finance) developed his own estimate of the cost of the new bonds. The Managing Director and Director (Finance) of IRFC were trying to figure out the economic advantage of green bonds besides its social benefits.

Complexity academic level

MBA Programme Executive Training.

Supplementary materials

Teaching notes are available for educators only.

Subject code

CSS 1: Accounting and Finance.



Disclaimer. This case is written solely for educational purposes and is not intended to represent successful or unsuccessful managerial decision-making. The authors may have disguised names; financial and other recognizable information to protect confidentiality.


Dash, A. (2021), "IRFC – the beginning of a green era", , Vol. 11 No. 1.



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