Shriram Finance , the company formed by the recent merger of Shriram Transport Finance and Shriram City Union Finance, intends to expand its depositor base. 

Today, some 6 lakh depositors have put in about ₹32,000 crore in Shriram Finance . The non-banking finance company (NBFC) wants to increase the number to over ₹75,000 crore by 2030, the company’s Executive Vice Chairman, Umesh Revankar, told businessline today, on the sidelines of the company’s press conference. 

He said there was once a time when retail deposits were costlier, but not anymore. The company pays 8.4 per cent interest to depositors, 0.5 per cent more for senior citizens. 65 per cent of the depositors are senior citizens. 

On raising money to lend, Revankar said that Shriram Finance was talking to ADB and AIIB for loans worth $250 million, though the loan from ADB “is likely to be a rupee loan.” Earlier this month, the company took a 3.5-year-tenor foreign currency loan of $224 million from a consortium of banks led by HSBC. 

Merger effect 

Shriram Transport Finance was a NBFC that gave loans for buying commercial vehicles, mostly used trucks. The company had carved a niche for itself in the lucrative, but seemingly risky business of lending for buying old trucks, even beyond 8 years — a segment that most other lenders keep away from. In the blue ocean, Shriram Transport made a success of the business. 

Shriram City Union Finance specialised in financing tiny businesses and gold and personal loans. 

The merged entity, Shriram Finance, has an outstanding loan book of ₹171,000 crore, which Revankar expects to grow 15 per cent CAGR. 60 per cent of the book comprises loans to commercial vehicles, 17 per cent passenger vehicles, 12 per cent MSME, 6 per cent two and three wheelers and 3 per cent gold loans. Revankar said the profile would broadly remain the same, except that the new company would take its MSME and gold loan products across the country; today most of the borrowers are from the south.  

In addition, Shriram Finance would get into mortgage and bill discounting, leveraging on the customer base of the erstwhile Shriram City Union Finance. However, mortgage loans would necessarily be business related, not personal, Revankar said. 

Today, Shriram Finance has 3,633 branches and offices, 52,382 employees. It enjoys a net interest margin of 8.7 per cent, 2.7 per cent return on assets but has to contend with 6.7 per cent gross NPA. 

The name of the holding company of Shriram Finance—Shriram Financial Ventures (Chennai) Pvt Ltd, (which holds 25 per cent in Shriram Finance) — is to be changed to Shriram Capital Pvt Ltd. The Sanlam group of South Africa has 36 per cent stake in the holding company; the rest is held by an ownership trust. In Shriram Finance, the Piramal group holds 8.2 per cent. 

On the NSE today, the Shriram Finance closed at ₹1,332. 

Still in RT’s way 

Revankar said Shriram Finance would continue to be run in the “RT’s way”, a reference to R Thyagarajan, who founded and ran the group for three decades. In the 1970s, Thyagarajan, as an employee of New India Assurance, noticed that employee drivers and cleaners of truck companies wanted to buy vintage vehicles and offer trucking services themselves, but nobody was prepared to lend to them for buying the used trucks. Thyagarajan started Shriram Transport Finance in order to serve them. 

Today, Thyagarajan has completely exited the Shriram group, having handed over the reins to the employees, but his influence over the group is unmissably there. 

Revankar said Thyagarajan believed in personal, rather than transactional, relationship with customers and insisted on frugality in operations. These values would continue to guide Shriram Finance, he said. 

“He is a thinker. As a man of numbers (Thyagarajan is a statistician), he can picture future scenarios,” Revankar said, adding that he still goes to RT for strategic advice. 

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