Shriram Finance is seeking to join a select group of entities which underwrite government debt, people familiar with the matter told Bloomberg. The company has sought approval from the Reserve Bank of India (RBI) to set up a primary dealership, for which it plans to launch a separate entity, the people said.
Primary dealers which consist of banks and securities firms are mandated to underwrite auctions of sovereign debt and ensure sufficient trading liquidity in the market. The move by Shriram Finance highlights the company’s intent to deepen its presence in India’s fast-growing bond markets as the country ramps up infrastructure investments to attract multinational firms.
Bloomberg reached out to Shriram Finance for comments but the company declined.
According to the latest data, the outstanding amount of federal government bonds was at Rs 112.5 trillion ($1.3 trillion) as of April 7. At present, there are seven standalone primary dealers and 14 banks which have PD departments. The RBI is very selective about giving PD licenses as these entities play a crucial role in the smooth passage of the government’s borrowing program.
Shriram Finance offers loan services for products ranging from automobiles to gold. A primary dealership license may help the company deepen its integration with India’s broader financial system.
Shares of Shriram Finance were up 4.28 per cent at 11:30 am at a trading price of Rs 641.80.