Railway Accounts Department Examinations

Tuesday, March 30, 2021

Budget Order & Expenditure Order

 Budget Order: 

  • Order by means of which was voted by Parliament & approved by President, communicated by Railway Board & Zonal Railway. 

Expenditure Order: 

  • When orders are issued by the Railway Board authorising the Railway administrations to incur expenditure to a certain extent over and above the allotment sanctioned for them, they should be taken as Expenditure Order as distinct from “Budget Order”

Custody Stores

 Custody Stores

  • Consists of items obtained for the Mechanical Dept for the construction of Rolling Stock sanctioned under RSP

  • Received directly by Mechanical Dept.

  • Payments made by the Workshop Accounts Officer

  • Responsibility of proper numerical records of Receipts, Issues & balance are kept by the Mechanical Dept

  • But Responsibility of safe custody of Custody Stores,  by the Stores Dept attached to the Production Unit /Workshop.

  • Periodical check of Stock cards & Material Schedules is exercised by the ASVs with copies of receipts and issue notes received by them. 


  • Debit to the cost to Work in question.

  • Credit to the Purchase Suspense

On Receipt: 

  • Receipt Notes - prepared in 4 foils printed on different color than those in use of Stores Dept for easy identification. 

  • Distribution of 4 copies

  • 1st copy  -  Office copy

  • 2nd copy - Firm (who supplies the stores)

  • 3rd copy - Workshop Accounts Office 

  • 4th copy - Workshop Progress Office ( as an intimation that stores can be drawn when needed, when the particulars of receipt of stores are entered on the copy of Material Schedule. 

On Issue: 

  • Authority: Pink Issue tickets/Pink Workshop Issue Notes signed by the Supervisor. 

  • 4 copies

  • 1st copy - Office copy

  • 2nd, 3rd & 4th  -  Sent to DMS/DSK who checks them with Pink Issue Ticket, sign all 3 copies and return 3rd and 4th to Workshop SSE and retain 2nd copy as Stores Dept copy

  • 3rd copy - Mechanical Dept

  • 4th copy - Accounts Office. 

Note: However, due to computerization (iMMS), the above procedure may be simplified/customised accordingly.


Wednesday, March 24, 2021

First Centralized AC Railway Terminal - Bangalore

First Centralized AC Railway Terminal - Bangalore

  • India’s First Centralized Air Conditioned Railway Terminal

  • At Bangalore ( Baiyappanahalli )

  • Named after one of the foremost civil engineers, Bharat Ratna Sir  M. Visvesvaraya

  •  To meet the ever increasing demand for new trains

  • Sanctioned in 2015-16

  • Cost - Rs. 300 Crores (Approx)

  •  It decongest the existing Railway Stations at KSR Bengaluru and Yesvantpur.

  • Airport like facade

  •  State-of-the-art passenger amenities

  • 4200 Sq Meters area

  • Daily footfall - 50 thousand

  • Can operate 50 trains daily

  • Grand canopy over the Station Building concourse (like in Airports)

  • Fully AC entrancy Lobby

  • Good parking facility

  • 7 Platforms (along with 8 stabling lines and 3 pit lines)

  • Food courts, Escalators, Lifts, FOB, Subways

  • Water recycling plant - 4 Lakh liters capacity per day

Sunday, March 14, 2021

IRFC - Indian Railway Finance Corporation and EBR (IF)

 IRFC - Indian Railway Finance Corporation and EBR (IF)

By M Nageswara Rao

Salient Features

  • IRFC Website: http://irfc.nic.in/  

  • Chairman & MD : Shri Amitabh Banerjee, IRAS (2020 year)

  • Hqrs: New Delhi

  • Dedicated borrowing arm of Indian Railways

  • IRFC's share capital has been wholly provided by the Govt. of India.  Under the new companies Act, 2013, IRFC is a "Government Company" (being more than 51 % of share capital contributed by Govt.)

  • Recently divested its stake to the Public in the open market.

  • One and only Non-Banking Financial Company (NBFC) dedicated to the development of Railways

  • Assets as on date: Rs. 1,30, 000 Crores

  • IRFC is managed by a lean team - Total strength - 25 only -  a rare mix of Civil servants, CAs, MBAs, ICWAs, CFAs, and Engineers. The Overhead to Turnover Ratio is 0.15 %, which is perhaps the lowest for any company the world over. 

  • Established in the year 1986 as a Public Limited Company under the Companies Act, 1956/2013.

  • A Schedule ‘A’ CPSE - Central Public Sector Enterprise - under administrative control of the Ministry of Railways. 

  • Charges a margin of 0.5% over the average borrowing rate in a year

  •  The one and only major client is Indian Railways.



  • The Budgetary support from the Ministry of Finance is dwindling and insufficient internal resources to meet the rising needs of Traffic. To cope up the increasing traffic needs, Indian Railways has no other option, but to depend on mobilizing resources from Public.


  • No Ministry , (except Ministry of Finance) has the right to mobilize the funds  by issue of bonds to the Public.  So Indian Railways has floated a company under the Companies Act i.e., IRFC for raising resources from Public through issue of Bonds.

Vision:  To be a premier Financial Services Company for the development of the Rail Transport sector.

Mission: To make IRFC one of the leading Financial Service Companies in the country, for raising funds from the Capital market at competitive cost for augmenting Railway plan finances


  1. To mobilise market borrowings at the most competitive rates as per annual targets fixed by the Ministry of Railways.

  2. To provide timely funding for acquisition of Rolling Stock assets for use by MOR.

  3. To explore the possibility of financing CPSEs and other entities such as RVNL, RLDA, RCIL, PRCL etc for creation of rail infrastructure.

Business of IRFC is :-


  • To mobilize resources through market borrowings from Domestic as well as Overseas Capital Markets at most competitive rates.

  • Funding for acquisition of Rolling Stock Assets and leased to Railways.

  • IRFC also gives loans to RVNL-Rail Vikas Nigam Ltd, RLDA,Railtel Corporation of India ltd, PRCL etc towards viable and bankable projects being executed by them.

IRFC - Lease terms: -


  • IRFC leases the assets from the month of acquisition to IR based on a standard leasing agreement. Cost of borrowing to Railways is around 8.4%.  (Whereas Cost to IRFC is 7.9 % with a margin of 0.50 %)

  • Indian Railways pays lease rentals to the IRFC every half year.

  • After 30 years, Rolling stock assets may be sold to the Indian Railways for a nominal price.


IRFC's Leasing Charges - Accounting policy


  • Before 2005 year, entire Leasing charges (both Principal & Interest) paid to IRFC had been charged to Revenue i.e., Demand No.09 - Abstract G - Operating Expenses - Traffic.


  • However, In the year 2005, Indian Railways changed its accounting policy for the Lease charges paid to IRFC.


  • From 2005 year onwards , Leasing charges paid to IRFC have bifurcated as follows.

Principal component

New Plan Head -2200 - Leased Assets ( Demand No.16)



Demand No.09 - Abstract G - Operating Expenses - Traffic

  (OWE - Ordinary Working Expenses)


  • This has resulted in the reduction of OWE - Ordinary Working Expenses of

Indian Railways and improved the Operating Ratio.




Role of IRFC in Indian Railways infrastructure:


  • Part of EBR - Extra Budgetary Resources requirement of IR.

  • Share of IRFC in Capex of IR is nearly 25 %

  • Cumulative funding to Rail Sector - Rs. 2.20 lakh crore as of 31.03.2018

  • Nearly 9000 Locos, 50000 coaches, 2.5 lakh wagons - constitute nearly 75 % of the Total Rolling stock fleet of Indian Railways. 

  • Three fourth of   ( 75 % ) of Rolling stock assets operating on the Indian Railways network is funded by IRFC.

  • Target for IRFC - Rs.30,000 Crores  (out of Rs.1,60,000 Crores) -2020-21 Capex


EBR (IF) – Extra Budgetary Resources (Institutional Financing)


  • New source of finance for funding CAPEX-Capital Expenditure in Indian Railways in addition to the existing sources of finance.


  • Existing/traditional sources of  finance in Indian Railways are 1) Loan Capital 2) Depreciation Reserve Fund 3) Development Fund 4) Railway Safety Fund 5) Capital Fund 6) EBR – Extra Budgetary Resources like IRFC, RVNL, PPP.


Context/backdrop of initiating EBR (IF):


  • Railways expansion (Works Budget) has suffered very much due to shortage of resources either by insufficient support from the Ministry of Finance (General Revenues) in the form of Loan Capital or unable to generate internal resources due to not increasing passenger fares to match cost recovery.


  • Large shelf of projects could not be completed due to insufficient funds.


  • Result is “time overruns” and “cost overruns”.  Also non realization of revenue/income for the period of delay.


  • To overcome the shortage of funds for the works programme, the Railway Ministry decided to borrow funds from INSTITUTIONS, so as to ensure the completion of crucial railway projects for generation of revenue.




  • Utilised for only priority works such as New Lines, Gauge Conversion, Doubling, Traffic Facilities, Railway Electrification, S&T etc.  - Object is to enhance throughput on the congested corridors.


  • One more condition for employing these funds are " Should be utilised in such a manner either completion of projects in the same year or first quarter of the following year".


  • As of now, LIC funding is the main source of EBR(IF).  In this regard an MOU between IR and LIC was  signed on 11.3.2015.  LIC has agreed to fund 1.5 lakh crores over next five years.  This is just the beginning of a new era of funding Railway CAPEX.


  • In future, several institutions including foreign pension funds may fund the Railway projects through this mechanism.

  • IRFC will raise funds from LIC against BONDS periodically based on IRs requirements.

  • Deposit -IF account is maintained by PAO/RB/Northern Railway (similar to the IRFC Deposit a/c for rolling stock funding).


  • PAO/RB will transfer the funds to the Zonal Railways on a requirement basis.


  • EBR-IF funds drawn for a project will be NON-LAPSABLE and any amount unspent for unavoidable reasons shall be carried forward as Opening Balance for Next year.


  • EBR-IF funded projects would be treated like 'DEPOSIT WORKS" for accounting of fund flows.  However  no departmental charges i.e., 12.5 % shall be applicable for works funded from EBR(IF).  (Because departmental charges are levied for Deposit works, but the works which are proposed were purely Railway ones)


  • Repayment of Loan through Lease charges by IR to IRFC is as follows. Period of payment is 30 years.


1-5 years


11-30 years

Interest component

Interest component

Capital component

Though Interest, but it is capitalised and charged to Demand NO.16 (PH 2200)

Charged to Demand No.09-790

Charged to Demand No.16(PH 2200)


  • Mechanism of LIC funding Railway projects is an interesting one. IRFC issued BONDS to the LIC.

  • The funds which recd through BONDS , will be provided to the Indian Railways for completion of crucial projects by IRFC.


  • IR develops/constructs the projects (behalf of IRFC) by entering "DEVELOPMENT AGENCY AGREEMENT" with IRFC.


  • The required land for development or construction of such projects is licensed to the IRFC by IR duly entering "LICENSING AGREEMENT".


  • IRFC will own the project on pro rata basis (to the extent of funding by IRFC)


  • Such owned assets will be leased to the IR by IRFC duly entering the "LEASE AGREEMENT"


  • Based on the Lease Agreement, IR will pay the Lease charges to the IRFC during the lease period.  Usually Lease charges contain i) Capital component chargeable to New Allocation 2231(projects) & 2232(Rolling stock) under Minor Head 2200 i.e., Plan Head 2200 under Demand No.16 and ii) Interest component chargeable to Demand No.09 - Operating Expenses - Traffic ( 09-791 (Projects) & 09-792 (Rolling stock)


  • IRFC will use these lease charges for redemption of bonds (issued to LIC) and arrange payments to the LIC.


  • Thus the account has come to an end.




  • Construction of New line of 100 Kms between Stations A and B.  LIC funds (through IRFC) were utilised to the extent of 25 Kms (out of 100 Kms). 


  • IRFC will own the project assets i.e., 25 Kms (on pro rata basis) and the lease the same 25 Kms to the Indian Railways on LEASE basis.




  • More or less, EBR (IF) is similar to funding of Rolling stock so far by IRFC by issuing bonds to the public/institutions since 1986.


  • In both cases, IRFC is leasing assets to the IR and in lieu of Lease charges.


  • However the good sign is coming forward of Institutions such as LIC for helping CAPEX of Railways.


  • But Railway has to bear the interest rate around 8 to 10 % in case of EBR(IF) instead of traditional funding by Loan Capital at the rate of 4 % dividend ( effectively it was 2.5 % only considering the subsidies/reliefs)





 Public listing of IRFC


  • The initial public offer (IPO) of the IRFC - January 18-20, 2021, at a price band of Rs 25-26 per share

  • Subscribed nearly 3.5 times.

  • It received bids for 432 crore shares against the issue size of 124.75 crore shares. 

  • Ahead of the IPO, IRFC had raised about Rs 1,400 crore from anchor investors.

  • The issue constituted up to 13.64% of the post issue paid-up equity share capital of the company.

  • Became the first NBFC from the PSU sector that went public today.

  • The IPO of the fifth railway's company to hit the stock market since 2017- comprised an issue size of Rs 4,600 crore, out of which the fresh issue comprises Rs 3,100 crore and OFS Rs 1,500 crore. IRFC share allotment was finalised on January 25.

  •  Government's stakeholding reduced to 86% from 100% post the IPO. 

  • The company will utilise the net proceeds from the Rs 4,634-crore IPO towards augmenting the company's equity capital base to meet future capital requirements arising out of growth in business and general corporate purposes. 

  • It is currently traded around Rs. 25 /- per share face value Rs. 10 /- (on 12th March, 2021)