Tag: shriram city union finance

Shriram City records highest-ever 2-wheeler loans of Rs 1,022 cr in November

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This was the second consecutive November when the NBFC has crossed the Rs 1,000-crore disbursement mark.

Shriram City Union Finance, the Chennai-based leading two-wheeler NBFC and part of Shriram Group, has disbursed the highest ever loans amounting to Rs 1,022 crore to 1.6 lakh two-wheelers in November 2021.

This was the second consecutive November when the NBFC has crossed the Rs 1,000-crore disbursement mark. The attractive financing offers during the festive season have stood out as one of the key drivers, with an additional push by the increase in people movement and recovery in rural demand leading to elevated disbursements. With the increasing demand for electric vehicles (EVs), the NBFC foresees a rise in the average loan ticket size which will help in touching new milestones, according to a company release.

Shriram City primarily caters to salaried and non-salaried buyers inclined towards the entry-segment two-wheelers having the highest demand across categories. The growing demand and intuitive use of AI-powered lending interfaces have triggered mass adoption by consumers and channels, thereby creating a network effect in further adding volumes. Followed by their milestone of financing over 1 crore two-wheelers, Shriram City Union is now the largest two-wheeler financer in India, offering app-based lending, paperless receipting, and contactless loans, it added.

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Shriram City Union Finance disburses highest ever loan worth Rs 1,022 cr in Nov, BFSI News, ET BFSI

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New Delhi, Dec 2 Shriram group’s two-wheeler financing arm Shriram City Union Finance disbursed the highest ever loans worth Rs 1,022 crore in November, the company said on Thursday. Shriram City Union Finance has disbursed the highest ever loans amounting to Rs 1,022 crore for 1.6 lakh two-wheelers in November 2021. This is the second consecutive November when the NBFC has crossed the Rs 1,000 crore disbursement mark, the company said in a release.

The Chennai-based non-banking finance company primarily caters to salaried and non-salaried buyers inclined towards the entry-segment two-wheelers, having the highest demand across categories.

“The attractive financing offers during the festive season have stood out as one of the key drivers, with an additional push by the increase in people movement and recovery in rural demand leading to elevated disbursements.

“With the increasing demand for Electric Vehicles (EVs), the NBFC foresees a rise in the average loan ticket size, which will help in touching new milestones,” Shriram City Union Finance said.

The growing demand and intuitive use of AI-powered lending interfaces have triggered mass adoption by consumers and channels, thereby creating a network effect in further adding volumes, the company said.

“Followed by their milestone of financing over one crore two-wheelers, Shriram City Union Finance is now the largest two-wheeler financer in the country, offering app-based lending, paperless receipt, and contactless loans,” it added.



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Gold loans shine the brightest in banks’ loan portfolio, BFSI News, ET BFSI

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Gold loans have emerged as the fastest-growing major loan segment as people have pawned their jewellery and lenders look at avenues of low-risk growth. Outstanding loans against gold jewellery stood at Rs 62,926 crore as on August 27, up 66% on a year-on-year basis, according to the Reserve Bank of India (RBI) data.

Gold loans are often used to finance consumption spending, such as children’s education, weddings, illnesses or to meet household expenses during distress.

Public sector banks have also entered the segment to further grow their retail business. Despite regulatory arbitrage of higher loan-to-value lending in March 2021, banks have continued aggressively disburse gold loans.

Gold loans were up 1% on month in August 2021 as restrictions during COVID-19 eased and economic activities grew.

Loan demand picked up from the beginning of July as COVID-19 cases started declining. Gold loans via non-banking finance companies (NBFCs) had reported higher customer walk-ins.

LTV impact

However, gold loans have grown a mere 3.6% YTD, which is in contrast with the 54% CAGR seen in gold loan growth over the past two years.

RBI had raised the LTV of 90% on gold loans, which allowed banks to lend up to 90% of the value of the collateral.

However, it withdrew special allowance for banks from April 2021, impacting loan growth.

The average ticket size of loans that customers are opting for is Rs 55,000-60,000, which are rising for many lenders, showed growing signs of distress.

Gold loan NBFCs saw higher competition in the gold loan business last fiscal as banks grew their portfolio taking advantage of the special LIV allowance given to them by the RBI.

The expansion

With growth returning, gold financiers are now gearing up to tap the expected surge in gold loans.

Muthoot FinCorp has expanded its physical network by more than 100 new branches, mainly in the north, east and west regions of India, most of which were in rural and semi-urban areas. The NBFC had opened 70 branches in FY20.

Muthoot’s gold asset under management (AUM) grew at a compound annual growth rate of 12% between FY15 and FY20. In FY21, the portfolio grew 27%.

Pune-based Bajaj Finance has increased its gold loan branches from 480 to 700 in the last financial year and plans to add 100 plus branches this fiscal.

Its loan book grew 52% last year to Rs 2,300 crore, while it saw an increase in ticket sizes from Rs 75,000 to Rs 85,000 last year.

Shriram City Union Finance is also looking to ramp up its gold financing business this financial year, changing its strategy of focusing on other loan portfolios.



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Gold loans sparkle again after second COVID-19 wave blip, BFSI News, ET BFSI

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Gold that lost shine after the Reserve Bank of India took away the loan-to-value (LTV) benefit for banks amid COVID restrictions in the second wave are sparkling again.

Gold loans were up 1% month on month in August 2021 as restrictions during the pandemic eased and economic activities grew.

Loan demand has picked up from the beginning of July as COVID-19 cases started declining. Gold loan non-banking finance companies (NBFCs) had reported higher customer walk-ins.

FILE PHOTO: Gold bars and coins are stacked in the safe deposit boxes room of the Pro Aurum gold house in Munich, Germany, August 14, 2019. REUTERS/Michael Dalder/File Photo

LTV impact

However, gold loans have grown a mere 3.6% year to date, which is in contrast with the 54% CAGR seen in gold loan growths over the past two years. Gold loan portfolios are up 66% year on year in August.

RBI had raised the LTV of 90% on gold loans, which allowed banks to lend up to 90% of the value of the collateral.

However, it withdrew the special allowance for banks from April 2021, impacting loan growth.

The average ticket size of loans that customers are opting for is Rs 55,000-60,000, which are rising for many lenders, showed growing signs of distress.

Gold loan NBFCs saw higher competition in the gold loan business last fiscal as banks grew their portfolio taking advantage of the special LIV allowance given to them by the RBI.

The expansion

With growth returning gold financiers are ow gearing up to tap the expected surge in gold loans.

Muthoot FinCorp has expanded its physical network by more than 100 new branches, mainly in the north, east and west regions of India, most of which were in rural and semi-urban areas. The NBFC had opened 70 branches in FY20.

Muthoot’s gold asset under management (AUM) grew at a compound annual growth rate of 12% between FY15 and FY20. In FY21, the portfolio grew 27%.

Pune-based Bajaj Finance has increased its gold loan branches from 480 to 700 in the last financial year and plans to add 100 plus branches this fiscal.

Its loan book grew 52% last year to Rs 2,300 crore while it saw an increase in ticket sizes from Rs 75,000 to Rs 85,000 last year.

Bengaluru-based Rupeek Fintech Private Ltd’s disbursals grew 2.5 times during the calendar year 2020. It has added its presence in 17 more cities, from 10 at the end of 2019.

Shriram City Union Finance is also looking to ramp up its gold financing business this financial year, changing its strategy of focusing on other loan portfolios.



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Non-bank lenders eye electric vehicle financing to grow business, BFSI News, ET BFSI

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Non-bank lenders are eyeing the electric two-wheeler space to grow disbursements. Shriram City Union Finance is tying up with Ola Electric which recently unveiled electric scooters ranging upwards of Rs 1 lakh. Hero Electric also partnered with two-wheeler life cycle management company Wheels EMI for offering easy financing options to customers.

“We believe that electric vehicle will be a big industry few years down the line and are taking efforts to expand base,” said Y S Chakravarti, MD, Shriram City Union Finance. “We are soon inking a tie up with Ola Electric, have tied up with Hero Electric and some original equipment manufactures.”

The non-bank lender has tied up with Okinawa, Ather Energy and Ampere. The two-wheeler financing segment is 26-27 per cent of its total loan portfolio.

Hero Electric has also collaborated with Wheels EMI to offer easy financing options for the purchase of electric two-wheelers in India.

“There is demand for flexible finance options, especially from rural India, as more and more customers today are enquiring and considering electric two-wheelers as their next upgrade,” said Sohinder Gill-CEO, Hero Electric

Hero Electric currently sells over 10,000 two-wheelers every month, of which 40% comes from rural pockets of India.

India’s electric vehicle (EV) financing industry is projected to be worth Rs 3.7 lakh crore in 2030, about 80 per cent of the current retail vehicle finance industry, according to a new report.
According to industry players major issues remain like financing challenges, high interest and insurance rates, low loan-to-value ratios, and limited specialized financing options.

“One of the major challenges have been around the quality of electric vehicles, if the vehicle stops running due to some quality issues, it impacts the collection of EMIs directly and there have been instances in the past that some of the financing partners had to face,” said Sumit Chhazed, Co-founder, OTO Capital which specialises in providing cost-efficient finance model for EVs.

“Another challenge is that the resale market is not yet established, hence if repossessed, it becomes difficult for financing partners to liquidate the asset at a desired value.”



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Gold loan business shines as economic stress grows amid pandemic, BFSI News, ET BFSI

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If you have noticed retail shops and restaurants closing down in your locality and brightly lit jeweller’s shop opening in its place off late, there is a business booming in the middle of the pandemic.

While it is not about people flocking to buy gold, but pawning and selling gold in the time of widespread economic distress brought about by Covid.

It’s not just the local jewellers that are expanding, but the organised ones are on growth mode too.

What gives?

RBI data showed that at the end of FY21, the total value of gold loans outstanding was nearly Rs 60,500 crore — up 82% on the year.

Loan demand has picked up from the beginning of July as Covid-19 cases are declining and economic activities are on the upswing with many states easing restrictions. Gold loan non-banking finance companies (NBFCs) said customer walk-ins have increased during the month.

The average ticket size of loans that customers are opting for is Rs 55,000-60,000, which are rising for many lenders, showing growing signs of distress.

Gold loan NBFCs are seeing more competition in the gold loan business in the current financial year as the special allowance given by the Reserve Bank of India to banks to take an LTV (loan-to-value) exposure against gold loan was valid till March 31, 2021. Banks had witnessed a significant growth in gold loan business due to this special allowance. On the contrary, gold loan NBFCs are allowed an LTV exposure of 75%.

Gold auctions

Mannapuram Finance auctioned Rs 404 crore in the fourth quarter, which shot up to Rs 1,500 crore in the June quarter. The auctions happen when borrowers are unable to redeem their gold and the lenders auction it to recover their loans. Mannapuram had auctioned just Rs 8 crore worth of the yellow metal in the first three quarters of FY21.

Manappuram Finance sees business picking up in the second quarter of the fiscal with the gradual unlocking of the economy. It sees a slight decline in the portfolio in the first quarter before the pick-up.

The expansion

Muthoot FinCorp has expanded its physical network by more than 100 new branches, mainly in the north, east and west regions of India, most of which were in rural and semi-urban areas. The NBFC had opened 70 branches in FY20.

Muthoot’s gold asset under management (AUM) grew at a compound annual growth rate of 12% between FY15 and FY20. In FY21, the portfolio grew 27%.

Pune-based Bajaj Finance has increased its gold loan branches from 480 to 700 in the last financial year and plans to add 100 plus branches this fiscal.

Its loan book grew 52% last year to Rs 2,300 crore while it saw an increase in ticket sizes from Rs 75,000 to Rs 85,000 last year.

Bengaluru-based Rupeek Fintech Private Ltd’s disbursals grew 2.5 times during the calendar year 2020. It has added its presence in 17 more cities, from 10 at the end of 2019.

Shriram City Union Finance is also looking to ramp up its gold financing business this financial year, changing its strategy of focusing on other loan portfolios.



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Shriram City expects to return to pre-Covid levels by Q2

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Shriram City Union Finance (SCUF) expects to return to the pre-Covid level of disbursements by the second quarter of this fiscal, backed by a steady pick up in demand across two-wheeler loans, loan against gold, personal loans and MSME finance.

According to YS Chakravarti, MD and CEO, Shriram City Union Finance, the company is looking to “aggressively push” two-wheeler as well as gold loans. While it also plans to push personal loans and SME loans, it will continue to remain cautious and prefer to lend to its existing customers.

“We normally do disbursements worth ₹6,500-6,600 crore during a quarter. We disbursed close to ₹2,000 crore in July alone, and we hope to register close to ₹6,000 crore during the second quarter of this fiscal,” Chakravarti told BusinessLine.

Also read: Shriram City, STFC raise ₹2,000 crore through retail fixed deposits in July

The NBFC had registered disbursements to the tune of ₹4,560 crore in Q1 FY22. While on a year-on-year basis it was higher by around 244 per cent, sequentially it was down by around 31 per cent when compared to ₹6,570 crore in Q4 FY21, due to lockdowns and limited business activities. However, things have been improving since June-July this year and the trend is expected to continue moving forward.

Sector-wise growth

As on June 30, 2021, Assets under Management (AUM) was ₹29,599 crore. The share of small enterprises finance came down to nearly 49 per cent of the AUM as on Q1 FY22 against 58 per cent in the same period last year.

The share of two-wheeler loans increased to 23 per cent (21 per cent); loan against gold was up at 15 per cent (10 per cent) and personal loans increased to eight per cent (six per cent) in the same period.

“NBFCs catering to MSME on the manufacturing side have been affected. Strategically, we work with the trading community; call it providence or the heritage (of the company), a majority (nearly 80 per cent) of our exposure has been to the trading communities and SMEs engaged in essential services, limiting the fallout due to Covid.

“But we are still cautious about this segment. Nearly 70-75 per cent of our lending is to the existing customers,” he said.

Also read: Shriram Housing Finance Q1 net profit up 82%

However, the company expects the share of SMEs to increase to 50-55 per cent of total business in the next two to three years, given the “immense scope for lending” and shortage of available funding options for the sector.

Nearly 80-90 per cent of the company’s two-wheeler loan book is in Tier II and rural markets, where the customers are either self employed or own small business. Nearly 98 per cent of the funding is for commuter vehicles and not high value bikes so the delinquency is low, he said.

GNPA

The company’s gross non-performing asset (GNPA) increased sequentially to 6.91 per cent in Q1 FY22 from 6.37 per cent in Q4 FY21; however, on a year-on-year basis, it improved from 7.28 per cent in Q1 FY21.

With collections improving on a month-on-month basis, the GNPA should pull back to March levels. “The NBFC’s collection efficiency in May was around 86 per cent; it went up to 93 per cent in June and in July it was almost 100 per cent,” he said.

Also read: Shriram City Union Finance Q1 net up 8% at ₹208 crore

SCUF’s restructured book stood at ₹39 crore as on June 30, 2021. It is likely to restructure accounts worth ₹40 core to ₹50 crore by September this year.

The company, which has a strong presence in South and West India, is looking to strengthen its footprint in UP and Bihar. Plans are afoot to grow its network and presence in the eastern States of Odisha and West Bengal post December this year.

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Shriram City, STFC raise record retail FDs worth Rs 2,000 crore in July

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Shriram City has a large, active customer base of 4.3 million spread across 926 branches

Shriram City Union Finance (Shriram City), a Chennai-based two-wheeler financing non-banking financial company (NBFC), and Shriram Transport Finance Company (STFC), one of the country’s largest asset financing NBFC, have raised record retail fixed deposits (FDs) worth Rs 2,000 crore in July 2021.

Attractive interest rates, large customer base of 6.4 million, proven track record of over 20 years of issuing FDs and digitally enabled systems along with the Covid-induced need for security led to the record FDs raised by Shriram City and STFC, both part of the Shriram Group.

Shriram City raised retail FDs worth Ra 390 crore, while STFC raised Rs 1,610 crore in July — the highest-ever funds raised from retail FDs for both entities. In Q1FY22, Shriram City witnessed retail FD growth of 33% to Rs 5,761 crore while STFC saw 49% growth to Rs 17,903 crore, said a release jointly issued by the companies.

Shriram City has a large, active customer base of 4.3 million spread across 926 branches. Top three states for Shriram City are Tamil Nadu, Andhra Pradesh and Telangana. It has 94% of its branches located in rural and semi-urban locations. Public deposits comprise 22% of the company’s borrowings.

YS Chakravarti, MD & CEO of Shriram City, said: “We are constantly working on providing our customers better products, be it on the credit or deposit side, and it is reassuring to see how many customers choose to place their hard-earned money with us. The rates offered by the Shriram Group entities are one of the most attractive in the industry, and backed by a strong parentage it makes for a great investment, especially for risk-averse investors.”

STFC has a strong customer based of 2.1 million spread across 1821 branches. Top three states for STFC are Maharashtra, Tamil Nadu and Delhi. STFC has 88% of its branches located in rural and semi-urban locations. Public deposits comprise 17% of the company’s borrowings.

Umesh Revankar, vice-chairman & MD, STFCL, said: “At Shriram Transport we have invested extensively in the way we do business digitally, which has the potential to draw deposits and service loans from a broader pool of potential customers. Above everything, it’s the long-standing positive relationships, strong brand awareness and loyalty, along with the fact that we are firmly established within the communities we serve that is bearing fruit.”

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Shriram City Union Finance Q1 net up 8% at ₹208 crore

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Shriram City Union Finance has posted an 8 per cent growth in standalone net profit for the first quarter of FY22 at ₹208 crore. The company’s net profit for the same period last year stood at ₹192 crore.

The total income of the NBFC grew marginally to ₹1,496 crore during the April-June quarter as against ₹1,415 crore in the year-ago quarter.

“During this quarter, the company has implemented resolution plans to relieve Covid-19 pandemic related stress of eligible borrowers under Covid-19 Resolution Framework 2.0 in terms of RBI Circular dated May 5, 2021, following board-approved policy. The total amount outstanding as on June 30, 2021 is ₹195.71 crore wherein relief was extended to 713 accounts,” the company said in its quarterly results filed with the exchanges.

The company has considered an additional Expected Credit Loss (ECL) provision of ₹3.47 crore on account of Covid-19 during the quarter ended June 30, 2021. As of June 30,2021, additional ECL provision on loan assets as management overlay on account of Covid-19 stood at ₹712.23 crore.

“The additional ECL provision on account of Covid-19 is based on the company’s historical experience, collection efficiencies post completion of Moratorium period, scheme by Government of India, internal assessment and other emerging forward-looking factors on account of the pandemic. However, the actual impact may vary due to prevailing uncertainty caused by the pandemic,” it added.

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Shriram Housing Finance to get capital infusion of Rs 500 crore from parent, BFSI News, ET BFSI

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Shriram City Union Finance has invested Rs 200 crore in its housing finance subsidiary Shriram Housing Finance Limited.
An Additional of Rs 300 crore could be invested over the next two years. The mortgage lender said, “The current infusion of Rs. 200 Cr will increase SCUF’s holding in SHFL to 81.16% from existing 77.25%. The funds will be used to provide growth capital to the fast growing HFC and enable it to expand its distribution network and customer base. The networth of Shriram Housing Finance which was at Rs. 576 Cr as of March 31st 2021, goes up to Rs. 776 Cr with this investment.”

In FY 21, Shriram Housing Finance has reported a growth in its AUM of 70% YoY, with the highest ever quarterly and yearly disbursements of Rs. 1005 crore and Rs. 2195 Cr respectively. The company ended FY 21 with PAT of Rs. 62.4 Cr, a strong 34% growth for the year. The ROA stands at a healthy 2.5%.

Ravi Subramanian, Managing Director & CEO, Shriram Housing Finance said, “We are happy to get incremental growth capital of Rs. 200 Cr from our parent. This capital infusion will help us expand our business and support our growth plans for the next 12-15 months. We have had a great FY21 and with this capital at our disposal, we expect to ride out the second wave of the pandemic and come out stronger in FY 2022. We have always focused on growing our business without compromising on quality and we look forward to continue doing the same. SHFL has forever stayed loyal to its mission of helping people own their dream home.”

Y S Chakravarti, Managing Director of SCUF added, “We are delighted to continue our support to SHFL. It is a dynamic, young and fast growing organisation and the Affordable housing space continues to impress and interest us. SHFL is an integral part of the group growth story and this investment is a testimony to that. The company is now well capitalised and poised for growth.”



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