Shriram Finance Targets 18 Percent Growth This Fiscal Driven by MUFG Partnership and New Product Lines

Shriram Finance Ltd is targeting an 18 percent growth rate for the current fiscal year, backed by its strategic partnership with Japanese financial-services group MUFG. According to Umesh Revankar, Executive Vice Chairman of Shriram Finance, the collaboration brings additional capital, lowers borrowing costs, and opens avenues to introduce new product offerings.

Speaking at a media interaction in Chennai, Revankar noted that MUFG maintains strong relationships with major Japanese automotive manufacturers such as Suzuki, Toyota, Honda, and Yamaha. Shriram Finance is actively exploring financing opportunities across the supply and distribution ecosystems of these firms, including dealers, sub-dealers, stockists, and component suppliers.

As part of this collaboration, MUFG will introduce certain customers and their retail requirements to the Indian NBFC. Revankar stated that there are 1,490 Japanese manufacturers operating in India across various manufacturing and service sectors, and Shriram Finance has been engaging with them to establish working relationships.

To support these initiatives, Shriram Finance plans to launch supply-chain financing, inventory financing, and dealer-financing products by October 1.

The partnership and lower funding costs are also enabling the company to expand its share of new vehicle financing. Historically, approximately 90 percent of Shriram Finance's vehicle financing was focused on used vehicles, but the mix has shifted to an 80-20 ratio. The company is experiencing rapid growth in new vehicle financing in Tamil Nadu, a state that currently accounts for 15 to 16 percent of its total assets under management (AUM) through a network of 843 branches.

For the broader growth outlook, Revankar reported that the company grew by 15 percent in the first quarter and anticipates stronger growth in the second half of the financial year. To support this expansion, Shriram Finance intends to add 2,000 to 3,000 employees to its existing workforce of 80,000. The company currently operates 3,225 branches and plans to open another 100 before the end of the fiscal year.

Addressing regulatory matters, Revankar stated that he does not expect the Reserve Bank of India's (RBI) new draft guidelines on revolving credit to negatively impact the growth of its MSME portfolio. He noted that the proposals remain in draft form, and industry representatives have engaged with the RBI to discuss the operational necessity of working capital features.

Additionally, Shriram Finance is working to double its gold loan business to 5 percent of its total portfolio. Gold loans are currently available across roughly two-thirds of its branches, and the company plans to add another 500 branches to that service network.

Despite its growing scale and classification as an upper-layer NBFC, Revankar confirmed that the company has no immediate plans to apply for a banking licence, emphasizing that remaining an NBFC allows for greater operational agility, customer reach, and product customization.

"The strategic partnership between Shriram Finance and MUFG highlights how cross-border financial collaborations can create localized business opportunities. By tapping into the established supply chains of Japanese manufacturers in India, Shriram Finance is effectively diversifying its portfolio into specialized segments like supply chain and inventory financing. Their decision to remain an NBFC while scaling operations demonstrates a clear focus on agility and customer customization rather than pursuing a traditional banking licence." — Dr. Shishir Gupta, Founder & CEO, StartupLanes