The article discusses the business strategy of Shriram Finance Limited (SFL), a non-banking financial company (NBFC) in India. SFL has a people-centric approach and relies on a network of branches, staff, and collection agents to operate. The company does not plan to go fully digital and instead focuses on personalized customer interactions.
SFL has a cautious approach to lending and avoids large ticket size and long-term loans. The company prefers small ticket sizes, with tenures of around three to five years, and does not lend to the affluent. Instead, it focuses on small families in rural and semi-urban areas. SFL has a strong presence in rural areas, with around 650 rural centers that will be converted into branches as the business volume increases.
The company exited its housing loans business due to the large ticket size and long tenures, which limited its liability sources. SFL shed its consumer durables financing business early on and instead focuses on gold loans, two-wheeler loans, and SME loans. The company finds these products promising due to their smaller ticket size and shorter tenures.
SFL is not keen to become a bank, as the cost of operations is higher. Instead, the company prefers to remain an NBFC, which allows it to reach customers and lend faster than a bank. The company’s strategy is to focus on a growing network of branches, staff, and collection agents to operate efficiently.
The article also highlights the importance of learning from mistakes, with SFL’s MD, Chakravarti, noting that the company allows its employees to make mistakes as part of the learning process. However, the company also emphasizes the need to ensure that mistakes do not become too expensive. Overall, SFL’s strategy is to focus on small-ticket size loans, personalized customer interactions, and a people-centric approach to operate efficiently and grow its business.