MUMBAI: SMFG India Credit has entered a reset moment. Months after its leadership change and the parent’s deeper push into Indian financial services, the non-bank financier's new chief Ravi Narayanan has made one thing clear: before growth or product expansion, the house must be put firmly in order.
The priority is to overhaul the company’s compliance and corporate governance standards to meet the expectations of both the Indian regulator and its Japanese promoters.
“There are group governance and expectations, thresholds, etc. The idea is to ensure that we wed ourselves completely to those expectations first,” managing director and chief executive officer Ravi Narayanan told Mint in an interview. “The i’s will be dotted and t’s will be crossed over the next 45-60 days.”
Earlier known as Fullerton India Credit Company Ltd, which began operations in 2007, the non-banking financial company (NBFC) was acquired by Sumitomo Mitsui Financial Group (SMFG) in two tranches between 2021 and 2024.
Former chief Shantanu Mitra stepped down effective 16 June, shortly after Sumitomo Mitsui Banking Corp. (SMBC) signed a definitive agreement in May 2025 to acquire a 20% stake in private sector lender Yes Bank.
With a new chief at the helm, the lender aims to reduce its share of unsecured loans, or those not backed by collateral, improve governance standards, and gradually leverage parent SMFG’s relationships with Japanese conglomerates to attract business in its operating markets.
As of 30 September, its total assets under management stood at ₹62,600 crore across loans against property, personal loans, housing, and business loans. Narayanan expressed confidence in growing the book at a compound annual growth rate of 20–25%.
Rival non-bank lender L&T Finance had a loan book of ₹1.07 trillion at the end of the September quarter, up 15% year-on-year.
Achieving the level of governance expected by the promoter, however, could take 12-15 months, given that the Japanese are “very disciplined and meticulous,” said Narayanan, whose last role at Axis Bank was head of retail liabilities, branch banking, and products.
Contrary to the perception that Japanese companies are conservative, Narayanan said their approach is more pragmatic or “aggressively realistic”.
“Yes, I want to gain wallet share and be of a certain scale and size, and do multiple products so that the franchise is kind of protected through the variables. But at the end of the day it has to be realistic, we have to anchor ourselves.”
The second line of action would ensure that within those governance norms, the company is able to create a robust business and thereafter grow it, he said. “The franchise should have stable growth, have platforms which can create sustained growth, and most importantly can deliver outcomes or incomes on a non-volatile basis.”
While comfortable on equity after SMFG’s capital infusion, Narayanan said additional capital is welcome and the NBFC is open to raising debt to grow the franchise sustainably. In FY25, SMFG invested ₹4,300 crore of equity in SMFG India Credit, including ₹1,300 crore in April 2024 and ₹3,000 crore in December 2024.
Building group synergies
A major part of SMFG India’s credit strategy is building on the group synergies of its parent group company, Sumitomo Mitsui Banking Corp. (SMBC). However, given the NBFC’s current scale and target markets, Narayanan said achieving these synergies will take time.
SMBC has long-standing partnerships with companies across various sectors, including Honda, Suzuki, and Hitachi. The gap arises because SMFG India Credit largely operates in rural markets, where these companies have limited presence. Only 3% of its 989 branches are in tier-one cities, 16% in tier-two, and the majority in tier-three and other towns.
“The expectations are there, but it won’t happen overnight,” Narayanan said, adding that he is hopeful of sustainable growth as and when the rural markets start maturing.
Balancing secured and unsecured growth
In September, Crisil Ratings reaffirmed the lender’s long-term rating at AAA/stable, citing expected ongoing support—equity and debt—from SMFG in both normal operations and exigencies.
“SMFG has senior level representation on the board and various committees of SMICC group and is involved in key decisions taken by the company. India continues to be one of the focus markets for SMFG Group,” analysts at Crisil said in September.
Historically focused on unsecured loans, the new chief said he aims for 55% of the portfolio to be secured and the remainder unsecured. According to Crisil, unsecured loans stood at 52% in FY25.
“I acknowledge the fact we are on the lower side of the spectrum (on share of secured loans). Not for anything else but to address my aspiration to be a non-volatile and stable franchise,” he said.
He added that secured growth will be supported by the wholly-owned affordable housing subsidiary, SMFG India Home Finance Co (formerly SMFG Grihashakti), which has started expanding in the past three to four years. The company also plans to grow its loans against property portfolio, including in rural markets where it has the largest presence.
The push for more secured loans does not mean abandoning high-yield unsecured lending, which has been the core strength of the business for 15-18 years and remains crucial for margins.
“I am not saying that I will leave high yield and suddenly start doing only big LAP or big ticket loans,” Narayanan said, adding that the portfolio has to find some kind of a “normalization benchmark”. The plan is to eventually bring down the share of unsecured loans to a comfortable 45-50%, he said.