Private Placement of Tax Free Bonds by Indian Railway Finance Corporation Ltd.

ISSUE TIME TABLE Issue Opening Date Issue Closing Date Pay-In Dates Deemed Date of Allotment

Monday Friday Monday to Friday Tuesday

October 10, 2011 October 21, 2011 October 10, 2011 to October 21, 2011 November 08, 2011

HIGHLIGHTS OF THE BONDS Issuer Indian Railway Finance Corporation Ltd. Issue Size Rs. 150 crore with an option to retain oversubscription (As per CBDT notification, IRFC can retain maximum subscription amount of upto Rs. 10,000 crore in FY 2011-12) Secured Redeemable Non-Convertible Non-Cumulative Tax-Free Bonds in the nature of Promissory Notes The income by way of interest will be entitled to exemption from income tax under section 10 (15) (iv) (h) of Income Tax Act, 1961 In dematerialized form Pari-passu first charge over the rolling stock assets of the Company AAA/Stable by CRISIL, LAAA by ICRA and CARE AAA by CARE Rs. 1,00,000/- per Bond At par i.e. Rs. 1,00,000/- per Bond 1 Bond (Rs. 1,00,000/-) and in multiples of 1 Bond (Rs. 1,00,000/-) thereafter Option -I 10 Years None At par on the expiry of 10th Year from the Deemed Date of Allotment 7.55% p.a. Annual October15, every year till maturity Option -II 15 Years None At par on the expiry of 15th Year from the Deemed Date of Allotment 7.77% p.a. Annual October 15, every year till maturity

Instrument Tax Benefits Instrument Form Security Credit Rating Face Value Issue Price Minimum Subscription Option Tenure Put & Call Option Maturity/ Redemption Coupon Rate Interest Payment Interest Payment Date Pre-Tax Yield Listing Trustee Interest on Application Money Who can apply

May be subjective and may vary from case to case. However some sample illustrations of pretax yield are given on the next page Proposed on the Wholesale Debt Market (WDM) Segment of National Stock Exchange of India Ltd. (NSE) Indian Bank At the respective coupon rate (subject to deduction of tax at source, as applicable) will be paid to the eligible investors from the date of realization of subscription money up to one date prior to the Deemed Date of Allotment Resident Individuals, Companies, Bodies Corporate, Scheduled Commercial Banks, Financial Institutions, Insurance Companies, Primary/ State/ District/ Central Co-operative Banks (subject to permission from RBI), Regional Rural Banks, Mutual Funds, Provident, Gratuity, Superannuation and Pension Funds, and any other investor authorised to invest in these bonds, subject to confirmation from the Issuer

IRFC BACKGROUND Financing arm of the Indian Railways Notified as a Public Financial Institution under Section 4A of the Companies Act, 1956 Registered as a NBFC-ND-IFC (Infrastructure Finance Company) with Reserve Bank of India 100% shareholding held by Government of India Consistently profit making Public Sector Undertaking Consistently rated AAA by CRISIL, ICRA and CARE Impeccable track record of funding rolling stock asset creation worth Rs. 60,163 crore (5,060 locomotives, 32,115 passenger coaches and 1,39,659 freight cars) for Indian Railways so far, besides providing funding support of Rs. 2,294 crore to other Railway entities such as Rail Vikas Nigam Ltd., Rail Tel Corporation of India Ltd. etc Capital Adequacy Ratio of 160.70% as on March 31, 2011 Return on Assets of 1.11% for the year ended March 31, 2011 (Rs. in crore) March 31, 2011 1602.00 2683.97 31256.74 6867.74 13.37 1339.64 3841.65 2943.30 898.34 898.35 485.20

IRFC FINANCIAL HIGHLIGHTS As on/ For the year ended Share Capital Reserve and Surplus Share Application Money (Pending Allotment) Secured Loans Unsecured Loans Net Block Current Assets, Loans & Advances Total Income Total Expenditure Profit for the Year Profit Before Tax Profit After Tax

March 31, 2009 500.00 1980.70 300.00 22600.25 4788.46 13.99 1799.33 3024.78 2367.05 657.73 657.69 180.79

March 31, 2010 1091.00 2314.48 27944.70 5663.88 13.69 2254.90 3483.94 2695.53 788.41 788.29 442.69

SAMPLE ILLUSTRATIONS FOR COMPUTATION OF PRE TAX YIELD (assuming that investment is made out of owned funds) 1. FOR BANKS & CORPORATES Tenure Coupon Rate Pre-Tax Yield (assuming tax rate of 33.15%) Income Tax @ 30%; Surcharge @ 7.50%; Education Cess @ 3.00% * 2. FOR INDIVIDUALS Tenure Coupon Rate Pre-Tax Yield a. Tax Slab @ 10% plus Surcharge @ 3% * b. Tax Slab @ 20% plus Surcharge @ 3% * c. Tax Slab @ 30% plus Surcharge @ 3% *

10 Years 7.55% 11.29%

15 Years 7.77% 11.62%

10 Years 7.55% 8.42% 9.51% 10.93%

15 Years 7.77% 8.66% 9.79% 11.24%

VALUATION GAIN FOR INVESTEMENT BY BANKS AS PER FIMMDA NORMS 10 Years 15 Years Tenure Current G-Sec Yield (semi-annual) (A) 8.56% 8.75% Current G-Sec Yield (annualized) (B) 8.74% 8.94% FIMMDA specified spread for AAA rated PSU Bonds (C) 0.98% 0.82% (as on 30-September-2011) Coupon Rate as per FIMMDA Valuation Norms (D) = (B+C) 9.72% 9.76% Pre-Tax Annualised Yield on IRFC Tax Free Bonds * (E) 11.29%. 11.62% Valuation Gain as per FIMMDA Norms (F) = (E-D) 1.57% 1.86% * The above calculations are illustrative only. As the tax slab and tax treatment is subjective and may vary from case to case, the potential investors are advised to consider in their own case, the tax implications in respect of subscription to these bonds after consulting their own tax advisors/ counsel/ authorities.