Shriram Capital Receives RBI Approval to Launch ARC

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.