NBFC Shriram Finance intends to raise $1 billion (about Rs 8,300 crore) from overseas in the next six months in order to finance the expansion of its operations. “We are planning to raise $300 million in the next few weeks, maybe by October and rest $500-700 million during the remaining part of the current financial year,”Y S Chakravarti, CEO, Shriram Finance Managing Director told PTI.
Loans from development finance organisations such as the United States Development Finance Corporation (DFC), Kfw and Asian Development Bank will also be included in the fund raising. He said that the timing will depend on the market condition.
The Non-Banking Financial Company (NBFC) raises funds from a variety of sources, including public deposits, bank financing and domestic market fundraising, to support the expansion of its operations.
According to Chakravarti, there will be a 15–16 per cent increase in loans during the current fiscal year.
By the end of June 2024, the company’s Assets Under Management (AUM) stood at Rs 2.33 lakh crore. The total amount disbursed in Q1 FY25 was Rs 37,710 crore, as compared to Rs 30,455 crore in Q1 FY24.
In November 2023, the Reserve Bank of India (RBI) asked that more capital be allocated to loans made to non-bank financial companies (NBFCs). This increased the cost of bank fund raising, particularly for smaller NBFCs.
Due to its stronger credit rating and diverse sources of borrowing, Shriram Finance, which offers loans to small and medium-sized businesses and for the purchase of commercial vehicles, has not experienced any funding pressure, according to Chakravarti. “It is the smaller players that are rated below AA which are getting squeezed. For us, it’s not too much of a concern because my entire bank borrowing in my total liability portfolio is about 24 per cent,” he added.
According to its expansion plan, the company is now offering gold loans through around 1,500 outlets, but it plans to add 500 more in the next two years.
(with PTI inputs)