Japanese major Sumitomo Mitsui Financial Group announced on Thursday that it has infused Rs 3,000 crore into its Indian NBFC subsidiary, SMFG India Credit Company, via rights issue. Of the total, Rs 300 crore has been directed towards its housing finance subsidiary, SMFG India Home Finance Company.
With another capital infusion round worth Rs 1,400 crore in April, SMFG India Credit Company (SMICC) has received Rs 4,300 crore from its Japanese parent so far in 2024-25 – the highest infusion in a year since the company began its India operations in 2007.
The latest infusion is expected to enhance the company’s capital adequacy ratio, which stood at 19.1% as of June 2024.
“The enhanced capital base allows us to scale our business operations and strengthen our ability to serve a diverse customer base,” said Pankaj Malik, chief financial officer at SMFG India Credit.
SMICC has been aiming to expand in India. In September, the company opened its 1,000th branch in the country. In the last two years, it has added 300 branches with more than 95% of these being in smaller cities and rural areas.
Shantanu Mitra, managing director and chief executive, SMFG India Credit, had earlier said that the company was aiming to enter into the upper layer of NBFCs – a scale-based categorisation of the Reserve Bank of India. This will require the company to get listed on the markets, which is expected in the next three years.
At the end of this September, SMICC’s assets under management were Rs 49,800 crore. This figure is likely to cross Rs 60,000 crore by the end of FY25.
The company has also been trying to reduce the share of unsecured credit in its books – something the Reserve Bank has been stressing upon. From the current 60%, the share of unsecured loans in SMICC’s books is likely to reduce to 50% in the coming quarters. It has already tightened underwriting standards and does not have a presence in the high-risk loan bracket of below Rs 50,000.