Executive Vice Chairman Umesh Revankar noted that incremental borrowing costs have fallen by 10 basis points (bps) quarter-on-quarter, but the impact on overall margins will be limited due to higher vehicle lending in March.
“I cannot say it will translate into total margin improvement. We need to wait. Typically, in the month of March, we also do large new vehicles and lending will be at little over 8%. So it may not have a big impact on net interest margin. But it will be definitely better than the previous quarter,” he said.
Also Read | Shriram Finance expects urban demand revival for CVs in Q4
Liquidity conditions for non-banking financial companies (NBFCs) have improved following the Reserve Bank of India’s (RBI) rollback of risk weights, and the liquidity infusion. While banks have yet to pass on lower costs, Revankar expects this to happen in the coming quarters.
The Chennai-based recently secured $306 million through external commercial borrowings (ECBs) from development financial institutions.
The company aims to maintain a diversified funding mix, targeting around 20% from each major source, including deposits, bank loans, securitisation, ECBs, and capital markets.
The ECB loan was secured at an all-in cost of 8.5% to 8.6% including hedging, benefiting from favorable rates offered by development institutions. “When they participate in a social loan, we can get a better rate,” said Umesh Revankar, Executive Vice Chairman of Shriram Finance.
Also Read | Shriram Finance plans loan, adding to record $2 billion funding
Contrary to market concerns, Shriram Finance has not seen significant challenges in vehicle financing. Though the October-December 2024 quarter typically experiences higher sales due to festive demand, Revankar indicated stable year-on-year (YoY) growth without noticeable negative trends.
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