Shriram Capital, the holding company of Shriram Finance, is set to enter the asset reconstruction and wealth management business as part of its diversification strategy. The Chennai-headquartered financial services conglomerate has committed ₹300 crore of capital for the asset reconstruction company (ARC) and has filed an application with the Reserve Bank of India for an ARC license. The ARC will be a retail-focussed outfit.

“Shriram is well positioned to set up a retail-focussed ARC platform considering its strong retail presence, expertise in acquiring stressed portfolios at the right price, and time-tested collection track record,” the management said in a media briefing. Further explaining the rationale for foraying into this business, Umesh Revankar, Executive Vice Chairman, Shriram Finance, detailed: “There are several ARCs in the corporate loans segment, but there aren’t many that are retail-focussed.”

The ARC would deal with all retail products except microfinance loans and would target loans with ticket sizes of less than ₹20 lakh. It would be set up as a subsidiary of Shriram Capital. “A team to operate the ARC business has been identified internally,” said Revankar, while adding that the company will commence operations as soon as its application is okayed by the banking regulator.

Wealth management

Adding a layer of portfolio to capital markets and asset management business, the group announced its foray into wealth management business. It will provide a unified and bundled wealth management proposition to the existing customer base of the Shriram ecosystem to begin with, which includes its customer base, employees, agents, and vendor network.

Aiming to position itself as a mid-market player, the wealth management arm would target savers with a wallet size of ₹25–50 lakh. “Over time, we’ve seen that the average deposits in our branches have increased from ₹15,000 to over ₹2 lakh, and hence we believe that the segment which we have chosen would be appropriate for us,” said Revankar. The business would be set up as a subsidiary of Shriram Credit, which, in turn, is a subsidiary of Shriram Capital.