Shriram Group, on account of its expanding loan book, has lowered its growth estimates for the business of non-banking finance companies (NBFCs), under the merged entity, from 15% to 12% in FY23.

Shriram Transport Finance Company’s Vice Chairman & Managing Director Umesh Revankar has said that the growth rate (Year-on-Year basis) and the credit demand may come down as lending rates increase. He further said that fluctuation in demand remains a cause of concern.

BSE-listed Shriram City Union Finance Ltd and Shriram Capital Ltd are expected to merge with STFC. STFC’s assets under management (AUM) rose by 9.55% YoY to Rs 1.30 trillion at the end of June 2022 from Rs 1.19 trillion a year ago. Shriram City Union posted a 20.6% YoY growth in AUM at Rs 0.40 trillion at the end of June 2022.

Revankar clarified that the growth in AUMs in the past three years was subdued due to the liquidity challenge for financial firms and the Covid-19 pandemic. By paying off maturing debt and deploying funds into lending, STFC will likely decrease the excess liquidity. He believes that liquidity would start getting used as credit demand is strong.

In June 2022, the firm was carrying excess liquidity of Rs 18,000. While maturities for the next three months are at Rs 8,000 crore. A prime reason for excess liquidity is a lumpy, foreign currency liability of dollar bonds.