Shriram Finance Targets $1 Billion Overseas Funding

Shriram Finance, a leading Non-Banking Financial Company (NBFC) in India, is gearing up to secure $1 billion (approximately ₹8,300 crore) in overseas funding over the next six months. This substantial capital infusion will fuel the company’s business expansion and growth initiatives.

The NBFC plans to raise $300 million in the coming weeks, possibly by October, followed by an additional $500-700 million before the end of the current financial year. To diversify its fundraising sources, Shriram Finance is exploring loans from renowned development financial institutions like the Asian Development Bank, Kfw, and the United States Development Finance Corporation (DFC), with the timing contingent on market conditions.

Domestically, Shriram Finance has historically relied on a mix of public deposits, bank finance, and domestic market fundraising to support its business growth. At the end of June 2024, the company’s Assets Under Management (AUM) stood at ₹2.33 lakh crore, reflecting its robust financial position.

In terms of loan growth, Shriram Finance anticipates a 15-16% increase during the current financial year. The company’s disbursement in the first quarter of FY25 reached ₹37,710 crore, surpassing the ₹30,455 crore recorded in the same period of FY24.

While the Reserve Bank of India’s (RBI) November 2023 mandate for increased capital provisioning for NBFC loans has made bank funding more expensive, particularly for smaller players, Shriram Finance has not faced significant funding pressures. The company’s higher credit rating and diversified borrowing sources have insulated it from the challenges faced by less-rated NBFCs.

Looking ahead, Shriram Finance is expanding its gold loan business, aiming to increase the number of branches offering this service from 1,500 to 2,000 within the next two years. This strategic move will further strengthen the company’s market position and contribute to its overall growth.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.