Shriram Finance Quote on RBI governor's views on lending exuberance and overreliance on fintech models

“The increase in risk weights of bank loans to NBFCs will result in a further evolution of the lending landscape. Since our capital markets are shallow, it does not present a convenient option for NBFCs, especially the smaller ones, to raise funds for lending. The increases in risk weightages could potentially restrict the money supply to MSMEs. Lending costs could increase, impeding the ability of NBFCs to serve vital business segments, such as the MSMEs.

The RBI has rightly flagged off potentially risky lending practices. It's evident that credit scores and algorithms are beneficial and help us in making better decisions but they can't protect against unforeseen challenges. Hence, along with the bureau reports, the human touch in our interface with borrowers has to also count for a lot. The engagement mechanism is crucial to overcome uncertainties.
Like larger NBFCs, we have our distinct business model founded on robust underwriting principles and practices. We are not relying on co-lending partnerships with Fintechs for building our lending portfolio.”

Umesh Revankar – Executive Vice Chairman, Shriram Finance Limited