Indian non-banking finance company, Shriram Finance, is considering raising funds denominated in Japanese yen to diversify its borrowing profile. According to the company's CEO, YS Chakravarti, talks are still in preliminary stages.
In an interview on Monday, April 28, 2025, Chakravarti told Reuters that "Our team is exploring a possibility if we can borrow from the Japanese (currency). This could be either from a bank or an international bond issue, which corporates can subscribe to." He also mentioned that Shriram Finance is "still exploring the market" and did not reveal the target amount or the specific timing for the fundraise.
This move towards yen-denominated fundraising aligns with Shriram Finance's broader strategy of diversifying its funding sources and optimizing borrowing costs. As of March-end, external commercial borrowing loans constituted nearly 15% of Shriram's total borrowing profile, while overseas bonds comprised about 6.8%. In December, the NBFC successfully raised $1.28 billion through a multi-currency social loan, denominated in dollars, euros, and dirhams, with tenors of up to five years.
The decision to explore yen-based funding comes at a time when Shriram Finance is also focused on deploying excess liquidity of approximately 300 billion rupees. The company intends to strategically use this liquidity to bargain for attractive rates and reduce borrowing costs from current levels, potentially driving net interest margins to the 8.50%-8.80% range for the current financial year, compared to 8.25% in the January-March period.
Shriram Finance is targeting an AUM (Assets Under Management) growth of around 17%-18% for the fiscal year 2025-26, which is higher than the earlier projected guidance of 15%. As of March-end, the company's AUM stood at 2.63 trillion rupees ($30.96 billion), representing a 17% year-on-year increase. The NBFC aims to leverage its passenger vehicle and small and medium enterprise (SME) loan portfolios to fuel AUM growth. The company is also exploring new financial products like unsecured business loans and supply chain financing.
On Friday, prior to this announcement, Shriram Finance reported a lower-than-expected fourth-quarter profit, primarily due to high finance costs impacting the bottom line. Following this report, the company's shares experienced a decline of as much as 9% on Monday.
In related news, Shriram Finance secured USD 306 million under its Social Finance Framework from multilateral and bilateral financial institutions, including the Asian Development Bank, Japan International Cooperation Agency, and Exim Bank of India, earlier in March 2025. Overall in the current financial year, Shriram Finance has raised over USD 2.8 billion in offshore funding, which underscores the company’s strategic emphasis on diversified, cost-effective funding.
Previously, in December 2022, Shriram Finance secured long-term funding of USD 100 million from the Asian Development Bank (ADB). The USD 100 million External Commercial Borrowing (ECB) is a 5 year loan and falls under SFL's Social Finance framework.
