Shriram Finance plans to raise $1 bn from overseas in next 6 months

NBFC Shriram Finance plans to raise $1 billion (about Rs 8,300 crore) from overseas in the next 6 months to fund its business growth.

"We are planning to raise $300 million in the next few weeks, may be by October and rest $500-700 million during the remaining part of the current financial year," Shriram Finance Managing Director and CEO Y S Chakravarti told PTI.

The fund raise would also include loans from development financial institutions like Asian Development Bank, Kfw, and United States Development Finance Corporation (DFC). The timing would depend on market conditions, he added.

To fund its business growth, the Non-Banking Financial Company (NBFC) raises resources from diversified sources like public deposits, bank finance and raising money from domestic markets.

On the loan growth, Chakravarti said, it is expected to increase 15 to 16 per cent during the current financial year.

The company's Assets Under Management (AUM) stood at Rs 2.33 trillion at the end of June 2024. Disbursement in Q1 FY25 aggregated to Rs 37,710 crore as against Rs 30,455 crore in Q1 FY24.

The Reserve Bank of India (RBI) in November 2023 asked all lending entities to set aside more capital on loans given to NBFCs. This made fund raising from banks costlier especially for smaller NBFCs.

Chakravarti said Shriram Finance, which provides loans to buy commercial vehicles and lends to small and medium-sized companies, has not seen any funding pressure due to the firm's higher credit rating and multiple-source borrowings.

"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 said.

With regard to its gold loan business expansion plan, he said, it is being offered from about 1,500 branches but 500 branches would be added in the next two years.