‘Plan to increase gold loan mix to 10%’
Tue April 30 2024
Shriram Finance intends to increase its gold loan mix to 10% of its loan book from nearly 3%, says managing director and CEO YS Chakravarti. He tells Ajay Ramanathan that the supply chain finance mix will increase to 5-8% in the next five years.
There are reports that Warburg Pincus and Bain Capital are in the running to buy stake in Shriram Housing Finance…
We are yet to finalise how much we are selling and to whom. The basic data have been shared among five prospective buyers which are doing their own evaluations. We are hoping that that by the end of the month, we will be clear on how much of the stake to divest. It depends on the price and the value that we are able to realise. So, on the basis of that, we will put it to the board committee. We need to see who gives us the most attractive offer.
The gold loan portfolio rose nearly 41% year-on-year in the March quarter. What is your strategy on gold loans?
We would like to take it to around 10% of the overall book. Gold loan is a high-churn product. So, it is not easy to build incremental assets under management. Secondly, we are not aggressively trying to reach out to customers of other companies, we would prefer to grow at our own pace. Competition is obvious in any business where there is safety and margin. That is why I am not looking at a very aggressive growth in gold loans. We have nearly 8 million customers and we will try to work with existing customers and grow the book.
What is your FY25 product pipeline looking like?
We have got into supply chain finance and have had a decent run. We have around Rs 600 crore of assets under management on the supply chain book as of March. We will expand the team and we will grow the supply chain book in two-three years. The idea is to increase the mix to 5-8% in the next five years. We do not want to grow too aggressively. We want to create a team and a base for at least two-three years before we actually start growing fast. We actually work on the product and the team for four-five years and then we start expanding the reach.
You witnessed an expansion in the NIM in January-March. What is your target for FY25?
We will be at around 8.9-9.0%. One reason for the expansion of the net interest margin is higher two-wheeler loans during the festival season. We were able to handle the NIM by making slight changes in the product mix. We will try to maintain this.
What is your strategy with the Shriram One App.
At present, our entire exercise with Shriram One is to make sure that customers do have a seamless journey. The idea is that once the customer is onboarded, she can complete her journey on the app and can actually access her account and ask for new products. We have hit 2.5 million downloads so far and are aiming at 10 million downloads before the year ends.
Source: https://www.financialexpress.com/