Shriram Capital gets RBI nod to launch ARC, says Umesh Revankar

Shriram Capital has received in-principle approval for its asset reconstruction company (ARC) from the Reserve Bank of India

Chennai based Shriram Capital has received in-principle approval for its asset reconstruction company (ARC) from the Reserve Bank of India (RBI), Umesh Revankar, Executive Vice Chairman of Shriram Finance said. In an interaction with Moneycontrol, Revankar said that the company, after receiving the approval, is working internally on the operations side.

“We have got the in-principle approval recently and now we will look at working internally for the next two quarters on the business side,” Revankar said. We still have nothing to decide on who will head the ARC, but the group, i.e. Shriram Group and not Shriram Finance exclusively, will look at the options, he said.

The company had submitted the application to the Reserve Bank of India (RBI) in November 2023. The ARC will be a 100 percent subsidiary of Shriram Capital, Revankar said.

Earlier in November 2023, in a post results call, Revankar had said that the ARC will focus more on retail loans, except microfinance loans, in terms of acquisition. This is because, there is no one in the retail segment who has the reach, network and capability of collections, and the company is trying to specialise in the area, he had further said.

Speaking about the management of the ARC front, Revankar had said that the company is trying to build an in-house team. "Reasonably, we have a large team size to identify from today and I can put them there and make it successful," Revankar had said in November 2023.

Q1 numbers

Shriram Finance, the flagship company of diversified conglomerate Shriram Group, on Friday reported a 19 percent increase in consolidated net profit at Rs 2,031 crore for the June quarter of FY25. The financial services firm registered a consolidated net profit of Rs 1,712 crore during the corresponding quarter of last year.

Total income during the quarter under review grew to Rs 9,610 crore from Rs 8,293 crore a year ago, 16 percent YoY growth, Shriram Finance said in a regulatory filing.

Total expenses rose to Rs 6,943 crore from Rs 5,760 crore in the same quarter a year ago, a growth of 21 percent.

The company's asset quality improved with Gross Non-Performing Assets (NPAs) declining to 5.39 percent of gross advances as of June 30, 2024, from 6.03 percent by the end of first quarter of the previous fiscal.

Net NPAs also moderated to 2.71 percent of the advances, from 2.96 percent at the end of the first quarter last year.