Railway Ministry Withdraws Convenience Fee Decision; IRCTC Shares Recover

After the Ministry of Railways withdrew the IRCTC convenience fee-sharing decision, shares of the Indian Railways' catering, tourist, and online ticketing arm - Indian Railways Catering and Tourism Corporation (IRCTC) recovered from drastic fall.

The Ministry of Railways has decided to reverse its decision on the IRCTC convenience fee, according to the Secretary of the Department of Investment and Public Asset Management.

Ministry of Railways on Friday withdrew its proposal to seek 50 percent of the convenience fee that IRCTC generates. The fresh development comes after IRCTC stock took a dive earlier in the day, falling over 25 percent on fears of derating amid regulatory risks.

IRCTC shares fell as much as 29% to an intraday low of 650.10 on the BSE earlier in the day after the firm informed exchanges that the Ministry of Railways had ordered it to share half of the convenience fee money it collects.

The state-owned IRCTC is the only company authorised to administer train dining services and has a monopoly on Indian Railways' online ticketing and catering services.

Currently, IRCTC and MoR do not share convenience fees. According to the IRCTC website, income from the convenience fee is calculated based on the value of the convenience fee earned on domestic tickets booked through the website.

IRCTC stock soared 20% in the prior session after it began trading ex-stock split. Starting on Thursday, IRCTC shares were split in a 1:5 ratio, reducing the face value of each share from ten to two dollars. On August 12, the IRCTC board of directors declared its intention to divide the stock.