Indian non-banking lender Shriram Finance aims to raise up to $1.5 billion from overseas markets in the current fiscal year to diversify its borrowing sources, its CEO revealed to Reuters on Tuesday.
“We are looking to secure between $1.25 billion and $1.5 billion (in fiscal year 2024-25)” through a combination of loans and bonds, said CEO and Managing Director Y S Chakravarti.
Out of this target, the lender has already raised $300 million and plans to secure an additional $300 million to $350 million within the next couple of months. The fiscal year concludes on March 31.
In November last year, India’s central bank instructed all lenders to allocate more capital for loans issued to non-banking financial companies, such as Shriram Finance, making it more costly to raise funds from local banks.
According to analysts, the Reserve Bank of India’s ruling has resulted in funding limitations for non-bank lenders that depend more heavily on domestic banks.
However, because of its higher credit rating and availability of different sources of funding, Shriram Finance, which offers loans to small and medium-sized businesses and for the purchase of commercial vehicles, has not seen any funding pressure, according to Chakravarti.
“The corporations with ratings lower than AA and smaller players are the ones under pressure. We’re not too concerned about it because, according to Chakravarti, my entire bank borrowing makes up between 24% and 25% of my entire liability portfolio.
At the end of June, bank loans made up 24.8% of Shriram Finance’s total borrowings; bonds and foreign currency loans made up 8.3% and 5.8%, respectively.
The company anticipates that the rise in its assets under management for the quarter ending September 30 will be between 15% and 16%, less than the 21% growth in the previous quarter caused by increased lending in the large-ticket new-vehicle market.