'Happy as an NBFC unless there's a glide path to becoming a bank'

Umesh Revankar, executive vice-chairman of Shriram Finance, speaks to Manojit Saha and Subrata Panda in Mumbai about why the company is content remaining a non-banking financial company (NBFC), the segments it is currently focusing on, and how it plans to maintain a steady growth of 15 per cent, given the current economic growth of the country. Edited excerpts:

- Umesh Revankar, executive vice-chairman of Shriram Finance,

What is stopping you from becoming a bank?

The regulatory requirement for banks is very high. It may look like NBFC and bank regulations are the same, but they are not. Also, you need to have a huge deposit franchise to become a bank. In the initial years, the cost of deposits is higher than your borrowings, with the ratio (SLR) and cash reserve ratio taken into account. So, why would current shareholders sacrifice profitability? I believe it is not easy to become a bank. Unless the regulators want large NBFCs to become banks and provide a glide path, we are happy to remain an NBFC.

Now that the gold loan norms have been relaxed, do you plan to grow this segment faster?

About 45 per cent of our book is commercial vehicles (CVs), 20 per cent is passenger vehicles (PVs), 6 per cent is two-wheelers, 7 per cent is construction equipment, 3 per cent is farm equipment, and 14 per cent is small and medium enterprises (SMEs).