Shriram Finance plans loan, adding to record $2 billion borrowing

By Divya Patil

 

Shriram Finance Ltd., India’s biggest truck financier, is in talks with banks to raise up to $250 million, adding to its record of $2 billion borrowing through offshore loans this financial year.

 

The non-banking financial company plans to raise the funds through a three-year loan, according to Parag Sharma, managing director and chief financial officer at Shriram Finance. The borrowing comes as the Chennai-based company looks to fund its double-digit credit growth, and follows its $1.3 billion multicurrency loan in December, the largest-ever offshore loan by an Indian shadow bank.

 

Shriram had a solid December quarter. Its loan book jumped 19 per cent on-year to Rs 2.5 trillion ($28.6 billion) and profits doubled. Funding costs are expected to ease for higher rated shadow banks in general after India’s central bank rolled back some of the curbs on banks lending to these firms last week.

 

 

The company plans to increase lending to the nation’s small- and medium-sized companies which find it hard to get loans from traditional banks. “We are seeing good demand from Tier 2, Tier 3 Indian cities for loans,” Sharma said in an interview in Mumbai. “Infrastructure sector is strong and rural agriculture output is good too, aiding our businesses. Our credit growth will be about 25 per cent this financial year.”

 

Typically, the firm borrows 80 per cent of its funds onshore and the rest via offshore bonds and loans, Sharma said. For now, Shriram is avoiding the overseas bond market due to high volatility and hedging costs, he said.