Umesh Revankar, Executive Vice-Chairman, Shriram Finance, says SME portfolio is around 11%, which we intend to grow that. Paytm has on-boarded more than 75 lakh merchants on their platform and we feel that lending to SME through that platform where we get the credit history of the individual entrepreneur is very important for us. We are focusing on individual entrepreneurs and micro enterprises. We are not into unsecured personal loans on a Paytm platform.”
Given that the RBI issued these regulations with respect to the increase in risk weights recently, for an industry as a whole, help us understand what is the extent of the impact?
By and large, the cost of capital would definitely go up and resources available can come down to the industry as a whole. But it depends upon the NBFCs. The NBFCs which are basically into asset-backed lending, may not have much challenge. But the NBFCs which are modelled on the unsecured loan may have a certain challenge in raising resources or even cost of raising resources. So it depends upon the individual NBFCs.
But as an industry, I feel the NBFC will have an alternative option of raising resources from other sources. So even if there is an increase in the cost of borrowing, the credit growth should not suffer by and large because the markets are good, the demand is good. And only the consumer loan or maybe the unsecured personal loan can have an impact which can bring down consumption to some extent.
Just when things were looking up for Shriram Transport Finance in terms of NIMS, in terms of spread, in terms of growth, you got this RBI decision. Could this really have an impact on the near term visibility? Would you be forced to revisit your numbers and guidance?
Overall guidance, we do not have to change now because if you look at the guidance given in the beginning of the year, we had given an expected NIM level of 8.5% and we have exceeded that by doing product mix, by having products which are high yielding products. That is where the Q2 had better NIMS, which we are confident of maintaining above 8.5%, which is the initial guidance.
Just trying to understand this move and how it impacts businesses like you, given that a majority of your loan portfolio is backed by assets, considering your borrowing mix versus peers, there could actually be advantages for you, right?
I do not really want to talk about advantages but we are, reasonably, on the safe foundation of always having diversified sources for our resources. And that has been our philosophy right from the beginning. Also, we always have a tenor matching borrowing, in the sense we do not borrow short at all. So, we always play safe and so there is no surprise to us.
How is the sector likely to move, given that the Q4 is always the strongest quarter for the truck financing business per se? How do you see Q4 of FY24 different from Q4 of FY23?
I do not really see a big difference. The only difference could be in the election because there is likely to be an election around April, May. Since the last quarter, January to March will feel some impact of the election campaign. There could be some slowdown in the infrastructure capex is what some of the analysts believe. Our record says that even in 2019, it did not happen. So, the government is likely to continue with the infrastructure capex. If that is continuing, it is going to be very good for the overall commercial vehicle industry and construction both.
Your partnership with Paytm is very unusual because you are in truck financing. Paytm is more like a consumer focused company, which does P2P lending. Why have you come together with Paytm? I doubt a truck financier will ever go on Paytm and take loan for a second-hand truck?
Please remember that now we are a multi-product company. We are no more a focused truck finance company. The truck portfolio in this new merged entity is 50%, the passenger vehicle is 20% and the SME portfolio is around 11%, which we intend to grow and we believe there are quite a large opportunities available in MSME lending. And Paytm has on-boarded more than 75 lakh merchants on their platform and we feel that lending to SME through that platform where we get the credit history of the individual entrepreneur is very important for us.
We therefore are focusing on the individual entrepreneurs and the micro enterprises. That is where our focus is. We are not into unsecured personal loans on a Paytm platform. The intention is to grow our SME book.
