Mumbai: Commercial vehicle financier Shriram Transport Finance has set a borrowing target of Rs 12,000 crore for FY12 and may look at a second retail bond issue before the end of the fiscal year, a top official said on Monday.
The firm, India’s top financier for used commercial vehicles, has already planned to raise up to Rs 1000 crore of the total through the sale of non-convertible debentures (NCD) to meet lending requirements and pay back debt, it said in an offer document.
The issue opens on 27 June and closes on 9 July.
Shriram Transport, which meets its capital requirements mainly through bank loans and NCD issuances, is working towards diversifying its liability portfolio through retail bonds.
“Retail is one of the big channels for us,” managing director R. Sridhar told reporters on Monday.
“Majority of our funding needs is now met through banks, but we are now diversifying.”
According to RBI regulations, non-banking finance companies (NBFC) in India are not allowed to go for offshore borrowings, limiting them to only the domestic avenues.
Shriram Transport has Rs 36,000 crore of assets under management as of end March 2011.
Last month, the Reserve Bank of India said that bank loans to NBFCs, excluding microfinance institutions which are categorised as NBFC, would not be classified as priority sector loans.
So, Shriram will have to replace its priority sector borrowings with banks to the extent of Rs 5,000 crore in the next three years, adding to its cost by at least a 100 basis points, Parag Sharma, chief financial officer said.