PUBLIC ISSUE OF TAX FREE SECURED REDEEMABLE NON CONVERTIBLE DEBENTURES of face value of Rs. 1,000 each having tax benefits under section 10(15) (iv) (h) of the Income Tax Act, 1961, as amended for an amount aggregating upto Rs. 4,532 Crs (the Shelf Limit)

INDIAN RAILWAY FINANCE CORPORATION LIMITED (A Government of India Enterprise)

ABOUT THE ISSUER

Company . Financial arm of Indian Railways, for the purpose of raising a part of the resources Highlights necessary for meeting the developmental needs of the Indian Railways . The President of India alongwith nominees is holding 100% of the Company’s equity share capital . IRFC has a strategically important role in the business of raising funds for the MoR since MoR relies primarily on the Company for external funding of its Rolling Stock . Registered with RBI as a non-banking financial company in February 1998 and classified as Infrastructure Finance Company in November 2010 Business . At the beginning of each Fiscal, the MoR notifies the Company of its financing Activities requirements which are to be met through market borrowings . At end of each year, a lease agreement is drawn for the rolling stock acquired by MoR and apportioned to IRFC during the year . IRFC also part-funds bankable projects (i.e. projects with sufficient collateral, future cash flows and high probability of success) approved by MoR and executed by Rail Vikas Nigam Limited (RVNL) . Company had also disbursed loans to other MoR agencies like Railtel Corporation of India Limited (“RailTel”), Konkan Railway Corporation Limited, Rail Land Development Authority and Pipavav Rail Corporation Limited Strengths . Assured net interest margin: Company’s cost plus based lease agreements with MoR provides a net interest margin which is added to cost of incremental borrowings to arrive at internal rate of return . Strategically important Dual relationship between Company and MoR – Company is a special purpose vehicle for meeting the funding requirements of the MoR, which along with its associated entities is also the Company’s sole client . All loans and receivables accrue from MoR and related entities like RVNL and RailTel which ensures there is no NPA . Demonstrated consistent growth in profitability: long term loans & advances have grown at a CAGR of 17.30% from FY 2011 to FY 2015 . Company is a quasi-sovereign entity and enjoys Government support . Company ability to source ECBs from various sources and geographies at competitive costs supplement commercial sources and broaden debt maturity profile . Committed workforce - highly competent and committed work force from diverse domains such as corporate lending, structured finance and law Strategies . Continue as the primary financer for the MoR by raising funds to ensure the development of economic, reliable, efficient systems and institutions in the Indian railway sector . Company intends to diversify the its borrowing portfolio by issuing different types of debt instruments to a wide Investor base Financial . Total Long Term Loans and Advances (excluding current maturities of long term Performance loan and advances) increased from Rs. 65,115.31 crores as of March 31, 2013 to Rs. 80,229.67 crores as of March 31, 2015 . Total Revenue increased from Rs. 5,551.54 crores for the year ended March 31,

2013 to Rs. 6,940.17 crores for the year ended March 31, 2015 . Profit before tax increased from Rs. 1,454.17 crores for the year ended March 31, 2013 to Rs. 1,914.17 crores for the year ended March 31, 2015 . Profit after tax increased from Rs. 521.57 crores for the year ended March 31, 2013 to Rs. 758.29 crores for the year ended March 31, 2015

TAX BENEFITS OF THE BONDS . The income by way of interest on these Bonds is fully exempt from Income Tax and shall not form part of Total Income . No deduction of tax at source (TDS) from the interest, which accrues to the bondholders in these bonds irrespective of the amount of the interest or the status of the investors . No upper limit on investment amount . No lock in period for the Bonds . The Bonds are proposed to be listed and can be traded on both BSE and NSE . Wealth-tax Act, 1957 has been abolished w.e.f. April 1, 2015 hence no wealth tax shall be levied on investment in bonds . However, no deduction from the total income will be available for invested amount Issue Opening Date – December 8, 2015 Issue Closing Date – December 21, 2015 General Terms of the Issue

Issuer Indian Railway Finance Corporation Limited (A Government of India Enterprise) ICICI Securities Ltd., SBI Capital Markets Ltd., A K Capital Services Ltd., Edelweiss Lead Managers Financial Services Ltd. and RR Investors Capital Services Private Ltd. Base Issue Size of Rs. 1,000 Crore with an option to retain oversubscription up to Issue Size Shelf Limit of Rs. 3,532 Crore Tax Free, Secured, Redeemable, Non-Convertible Debentures having tax benefits Instrument u/s 10 (15) (iv) (h) of Income Tax Act, 1961 Both in demateriaized form as well as in physical form, at the option of Applicants Issuance Form (except for Eligible QFIs except for Eligible QFIs, Eligible FIIs and Eligible FPIs, who will be allotted bonds only in in dematerialized form) Credit Rating ‘CRISIL AAA /Stable’ by CRISIL, ‘[ICRA] AAA’ by ICRA and ‘CARE AAA’ by CARE The Bonds issued by the Company will be secured by creating a first pari-passu charge on the movable assets of the Company comprising of rolling stock such as Security wagons, locomotives and coaches by a first pari passu charge, present and future, as may be agreed between the Company and the Debenture Trustee, pursuant to the terms of the Debenture Trust Deed and applicable laws. Listing Proposed to be listed on BSE and NSE Trustee SBICAP Trustee Company Limited Depositories NSDL and CDSL Registrar to the Karvy Computershare Private Limited Issue Issue Opening December 8, 2015 Issue Closing December 21, 2015 On Allotment: Same as coupon rate for respective categories Interest on On Refunds: 5.00% per annum Application Interest Period: from the date of realization of the cheque(s)/demand draft(s)/any Moneys other mode or three days from the date of receipt of the Application (being the date

of presentation of each Application as acknowledged by the Bankers to the Issue) whichever is later upto one day prior to the Deemed Date of Allotment Please note that interest on application money will not be paid to ASBA applicants or in cases where Application Amounts are received after the Issue Closing Date Please note that interest will not be paid on monies liable to be refunded in case of (a) invalid Applications or Applications liable to be rejected, and/or (b) applications which are withdrawn by the applicant

Specific Details on Individual Series

Options Series of Bonds* Category I, II, III# Tranche I Series IA Tranche I Series IIA Tranche I Series IIIA Coupon Rate (%) p.a. 7.07 7.28 7.25 Annualized Yield (%) p.a. 7.07 7.28 7.25 Options Series of Bonds Category IV# Tranche I Series IB Tranche I Series IIB Tranche I Series IIIB Coupon Rate (%) p.a. 7.32 7.53 7.50 Annualized Yield (%) p.a. 7.32 7.53 7.50 Common Terms Series of Bonds Category I, II, III & IV# Tenor 10 Years 15 Years 20Years Redemption Date At the end of 10 Years At the end of 15 Years from At the end of 20 Years from the Deemed Date the Deemed Date of from the Deemed Date of of Allotment Allotment Allotment Redemption Amount (Rs./ Repayment of the Face Value plus any interest that may have accrued at the Bond) Redemption Date Redemption Premium/ Not applicable Discount Frequency of Interest Annual Payment Minimum Application Size 5 bonds (Rs. 5,000), individually or collectively across all Series of Bonds and in and in multiples thereof multiples of 1 Bond (Rs. 1,000) thereafter. Face Value (Rs./Bond) Rs. 1,000 Issue Price (Rs./Bond) Rs. 1,000 Mode of Interest Payment For various modes of interest payment, see “Terms of the Issue – Modes of Payment” on page 61 of the Prospectus Tranche-I. Coupon Payment Date First Interest Payment date is on October 15, 2016 and subsequently on October 15 of every year except the last interest payment along with the redemption amount. Reset Process Not Applicable Coupon Type Fixed Interest on Application See “Terms of the Issue-Interest on Application Amount” on page 57 of the Money Prospectus Tranche-I. Discount at which Bonds Not applicable are issued and effective yield as a result of such discount Nature of Indebtedness The claims of the Bondholders shall rank pari-passu inter-se and shall be superior to and Ranking the claims of any unsecured creditors of the Company and subject to applicable statutory and/or regulatory requirements, rank pari passu to the claims of creditors of the Company secured against charge on the movable assets comprising of rolling stock such as wagons, locomotives and coaches.

# In pursuance of CBDT Notification and for avoidance of doubts, it is clarified as under:

a. The coupon rates indicated under Tranche I Series IB, Tranche I Series IIB and Tranche I Series IIIB shall be payable only on the Portion of Bonds allotted to Category IV in the Issue. Such coupon is payable only if on the Record Date for payment of interest, the Bonds are held by investors falling under Category IV. b. In case the Bonds allotted against Tranche I Series IB, Tranche I Series IIB and Tranche I Series III B are transferred by Category IV to Category I, Category II and/or Category III, the coupon rate on such Bonds shall stand at par with coupon rate applicable on Tranche I Series IA, Tranche I Series IIA and Tranche I Series IIIA respectively. c. If the Bonds allotted against Tranche I Series IB, Tranche I Series IIB and Tranche I Series IIIB are sold/ transferred by the RIIs to investor(s) who fall under the RII category as on the Record Date for payment of interest, then the coupon rates on such Bonds shall remain unchanged; d. Bonds allotted against Tranche I Series IB, Tranche I Series IIB and Tranche I Series IIIB shall continue to carry the specified coupon rate if on the Record Date for payment of interest, such Bonds are held by investors falling under Category IV; e. If on any Record Date, the original Category IV allotee(s)/ transferee(s) hold the Bonds under Tranche I Series IB, Tranche I Series IIB and Tranche I Series IIIB for an aggregate face value amount of over Rs. 10 lacs, then the coupon rate applicable to such Category IV allottee(s)/transferee(s) on Bonds under Tranche I Series IB, Tranche I Series IIB and Tranche I Series IIIB shall stand at par with coupon rate applicable on Tranche I Series IA, Tranche I Series IIA and Tranche I SeriesIIIA respectively; f. Bonds allotted under Tranche I Series IA, Tranche I Series IIA and Tranche I Series IIIA shall carry coupon rates indicated above till the respective maturity of Bonds irrespective of Category of holder(s) of such Bonds; g. For the purpose of classification and verification of status of the Category IV of Bondholders, the aggregate face value of Bonds held by the Bondholders in all the Series of Bonds, allotted under the respective Tranche Issue shall be clubbed and taken together on the basis of PAN.

The Company would allot Tranche I Series IA/IB Bonds (depending upon the category of applicants) to all valid applications, wherein the applicants have not indicated their choice of the relevant series of Bonds in their Application Form.

The MCA has, through its circular (General Circular No. 06/2015) dated April 9, 2015, clarified that in such cases wherein the effective yield on the bonds is greater than the prevailing yield of one year, three year, five year or ten year Government Security closest to the tenor of the loan, there is no violation of sub-section (7) of section 186 of the Companies Act, 2013

Eligible Investor Categories and Allocation

Category Who can apply Allocation Qualified Institutional Buyers as defined in SEBI (Issue of Capital and Disclosure Requirements) Regulation, 2009 as amended including:  Eligible Foreign Portfolio Investors (“FPI”), Foreign Institutional Investor (“FII”) and sub-accounts (other than a sub account which is a foreign corporate or foreign individual) registered with SEBI, Qualified Foreign Investor (“QFI”), not being an individual and registered with SEBI;  Public Financial Institutions, scheduled commercial banks, state Category I* industrial development corporations, multilateral and bilateral Upto 15% (Qualified development financial institutions which are authorised to of the Issue Institutional invest in the Bonds; Size# Buyers)  Provident funds and pension funds with minimum corpus of Rs. 25 crores, which are authorised to invest in the Bonds;  Insurance companies registered with the IRDA;  National Investment Fund set up by resolution no. F. No. 2/3/2005-DDII dated November 23, 2005 of the Government of India published in the Gazette of India;  Insurance funds set up and managed by the army, navy or air force of the Union of India or set up and managed by the Department of Posts, India;

 Mutual funds registered with SEBI; and

Alternative Investment Funds, subject to investment conditions applicable to them under the Securities and Exchange Board of India (Alternative Investment Funds) Regulations, 2012.  Companies within the meaning of sub-section 20 of Section 2 of the Companies Act, 2013;  Statutory bodies/corporations;  Cooperative banks;  Trusts including Public/ private/ charitable/religious trusts;  Limited liability partnership; Category II* Upto 20% (Non  Regional rural banks; of Issue Institutional  Partnership firms in the name of partners; Size# Investors)  QFIs and FPIs not being individuals;  Association of Persons;  Societies registered under the applicable law in India and authorized to invest in Bonds; and  Any other domestic legal entities authorised to invest in the Bonds, subject to compliance with the relevant regulations applicable to such entities. The following Investors applying for an amount aggregating to above Category III Rs. 10 lakhs across all Series of Bonds in each Tranche Issue: Upto 25% (High  Resident Indian individuals; of Issue Networth  Eligible NRIs on a repatriation or non – repatriation basis; Size# Individuals)  Hindu Undivided Families through the Karta; and  Eligible QFIs and FPIs being individuals. The following Investors applying for an amount aggregating to up to and including Rs. 10 lakhs across all Series of Bonds in each Tranche Category-IV Issue: Upto 40% (Retail  Resident Indian individuals; of Issue Individual  Eligible NRIs on a repatriation or non – repatriation basis; Size# Investors)  Hindu Undivided Families through the Karta; and  Eligible QFIs and FPIs being individuals. * As per Section 186(7) of the Companies Act, 2013 a company shall not provide loan at a rate of interest lower than the prevailing yield of Government Security closest to the tenor of the loan. However, MCA through its General Circular No. 06/2015 dated April 9, 2015, has clarified that companies investing in tax-free bonds wherein the effective yield (effective rate of return) on the bonds is greater than the prevailing yield of one year, three year, five year and ten year Government Security closest to the tenor of the loan, there is no violation of sub-section (7) of section 186 of the Companies Act, 2013.

 Participation of any of the aforementioned categories of persons or entities is subject to the applicable statutory and/or regulatory requirements in connection with the subscription to Indian securities by such categories of persons or entities.  The Investor must ensure that in case it is a FPIs, FIIs, Eligible QFI and/ or Eligible NRI, it is not (i) based in the United States of America, (“USA”), and/or, (ii) domiciled in the USA, and/or, (iii) residents/citizens of the USA, and/or, (iv) subject to any taxation laws of the USA.

#Note: Allotment shall be made on a first come first serve basis across all categories, on a date priority, to be determined on the basis of the date of uploading of each application into the electronic system of BSE or NSE. In case of under subscription in any Portion, priority in Allotments will be given in the following order: i. Category IV Portion; ii. Category III Portion; iii. Category II Portion; and iv. Category I Portion

(For further details, please refer to Shelf Prospectus and Prospectus Tranche – 1 of Indian Railway Finance Corporation Limited)