Shriram Capital has received in-principle approval from the Reserve Bank of India (RBI) to establish an Asset Reconstruction Company (ARC). The approval, granted after Shriram Capital’s application in November 2023, marks a significant step for the company.
ARC Establishment
- Approval Status: Shriram Capital has secured in-principle approval from RBI for its ARC.
- Internal Operations: The company is now focusing on internal operations and strategic planning over the next two quarters.
- Leadership: Decisions regarding the head of the ARC are still pending. Shriram Group, not just Shriram Finance, will explore leadership options.
ARC Focus and Management
- Focus Area: The ARC will concentrate on acquiring retail loans, excluding microfinance loans, leveraging its extensive network and collection capabilities.
- Management Team: Shriram Capital is in the process of building an in-house team for the ARC.
Financial Performance
- Quarterly Results: Shriram Finance reported a 19% increase in consolidated net profit to Rs 2,031 crore for Q1 FY25, up from Rs 1,712 crore in the same quarter the previous year.
- Income and Expenses: Total income rose by 16% YoY to Rs 9,610 crore, while total expenses grew by 21% YoY to Rs 6,943 crore.
- Asset Quality: Gross NPAs declined to 5.39% of gross advances, and net NPAs moderated to 2.71% as of June 30, 2024.
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