Shriram Group’s Asset Reconstruction Business Receives RBI Approval

Umesh Revankar, Executive Vice President, Shriram Finance

3 minutes of reading Last updated: July 28, 2024 | 16:56 IST

Chennai-based conglomerate Shriram Group is set to launch its asset reconstruction (ARC) business in the current financial year and the company has already received approval from the Reserve Bank of India (RBI), a top company executive said. Business standard.

The group had announced in November last year that it was planning to enter the ARC and wealth management business. While its wealth management business will come under Shriram Credit, a subsidiary of Shriram Capital, the asset reconstruction will be managed by Shriram Capital. “We have received preliminary approval from the Reserve Bank of India (RBI) for the ARC business. We are working on it. Both ARC and wealth management are group initiatives,” said Umesh Revankar, executive vice-president, Shriram Finance. The group is already in talks with multiple partners for its planned foray into wealth management. Another source said the ARC business will be entered in the current financial year.

On the other hand, Shriram Finance (SFL), India’s largest retail non-banking finance company, said there is unlikely to be a revision to its guidance of 15 per cent growth for the current financial year in terms of assets under management (AUM). The non-banking finance company’s total AUM grew 21 per cent to Rs 2,33,443.63 crore by the end of the first quarter as compared to Rs 1,93,214.67 crore during the same period in 2023-24.

“I think construction work will start after monsoon. We may see a lot of activity from September end. Second half should be good naturally because of that. The budget was positive and that should also help,” Revankar said about credit demand. “I was worried that elections would cause a lot of disruption. Since elections were slow, it did not disrupt a particular geographical area for a very long time. I think it did not have any negative impact on day-to-day life. So, credit demand was good. I expect the same demand trend to continue,” he added.

In June, the Shriram Finance board had approved the sale of its housing finance subsidiary Shriram Housing Finance (SHFL) to Warburg Pincus for Rs 4,630 crore to focus more on core operations and secure growth capital. The company operates across India, has 155 branches, and assets under management (AUM) of Rs 13,762 crore and a net worth of Rs 1,924 crore as of March 2024. Asked about the status of the deal, Revankar added that SFL is awaiting RBI approval for the transaction. The transaction is expected to receive regulatory approval by the end of the third quarter of the current financial year. SFL will receive Rs 3,900 crore from the sale.

The company has been around for three years since the merger in December 2022. “We wanted to complete all the integration activities within three years. The backend integration is 100 percent complete. We have been able to reach more customers with multiple products and the service has improved. It has definitely improved the net result. It will probably continue to improve. One of the goals was to get a higher rating, which we are working on and we may see some positive changes in this fiscal year,” he added.

First published: July 28, 2024 | 16:56 IST