Shriram Fin may offer loans for upskilling courses
1 min read 21 May 2023, 10:16 PM ISTThe company’s move comes when NBFCs are aggressively expanding portfolios by tying up with edtech startups, and aiming to become a one-stop shop for student loans, credit cards, besides laptop and electric vehicle financing.
PremiumNEW DELHI : Shriram Finance, a leading non-banking financial company (NBFC), is diversifying its portfolio to include education loans for students and professionals who are looking to upskill. The firm, known for financing two-wheelers and micro, small, and medium enterprises, is also preparing a substantial employee stock option plan to reward 10% of its workforce across hierarchies in a bid to retain talent.
“We may go into education loans. Today, the majority of the (education loan) market is to study abroad. We would like to offer loans for upskilling since a lot of courses now need upskilling," Umesh Revankar, executive vice chairman, Shriram Finance, said. The NBFC is building a platform and the new offering will be rolled out in 6-9 months.
The company’s move comes when NBFCs are aggressively expanding portfolios by tying up with edtech startups, and aiming to become a one-stop shop for student loans, credit cards, besides laptop and electric vehicle financing. “Upskilling is a nascent market but is growing at a rapid pace and is recession-proof. It became popular during the pandemic and even when the edtech sector was hit, upskilling was still booming," said Ankit Mehra, co-founder and chief executive, GyanDhan, an NBFC.
Mehra said while the upskilling market is fragmented, he has seen ‘sachetization’, where many candidates opt for short term courses instead of investing in 2-3-year programmes, which may impact their jobs. Upskilling loans are typically ₹50,000 to ₹4 lakh.
Shriram will not offer loans to students for overseas studies. “Study abroad is a 10-year loan. The yields are thin and I need money for other products," said Revankar.
The firm that employs over 64,000 people, is planning to offer stock options. “We have given stocks twice typically to the top 100 but this time, it can go up to branch managers, or at least 5,000 people," he said.
Typically, edtech companies tie up with NBFCs and these lenders roll-out quick and interest free loans for students. While disbursing the loan directly to the edtech company, the NBFC retains about 5% of the funds, thereby making money although the borrower does not pay any interest.
In 2022, Shriram Finance became the largest retail NBFC in India by the merger of Shriram Transport Finance Company- financier of commercial vehicles, and Shriram City Union Finance-financier of two-wheelers and a pioneer in financing to micro, small, and medium enterprises (MSME). It employs more than 64,000 and is also planning a round of stock options for them.
“We have given stocks twice earlier and may come out with it again. Stock options are typically given to top 100 but in this case, it can go up to branch managers, which means at least 5000 people can get it," Revankar added. According to a back in the envelope calculation, about 10% of the workforce should get stock options which would be about 6000.
The firm had offered stocks to 3500 a year and a half ago. Shriram Finance is the NBFC unit of the Shriram Group whose other businesses include asset management, life insurance and general insurance.
In 2005, founder-R Thyagarajan, bequeathed their ownership in favour of the employees’ trust as they felt that the group was built by the employees and they should own it. The Shriram Ownership Trust is an employee’s trust controls the entire Shriram Group’s activities via its holding company-Shriram Capital Private Ltd.
At the time of the merger between Shriram Transport Finance Company and Shriram City Union Finance , Shriram Finance said it had a net worth of ₹40,900 crores and assets under management (AUM) of ₹1,71,000 crores. The company has more than 6.7 million customers across India
