Demand will be stronger for vehicles between 3-10 years old, says Shriram Transport Finance

Umesh Revankar, Managing Director, Shriram Transport Finance believes that the Union Budget 2021 announcement on vehicle scrappage policy will increase the demand for 3 to 10 year old vehicles.

"That way we feel the business can become quite big and large for us," he said in an interview to CNBC-TV18.

"We normally lend for up to 10 years, at the maximum up to 12-13 years. So the announcement may not have any significant impact on the existing book. However, people are likely to buy younger vehicle between 5 and 10 years and there will be bigger demand in the 3 to 10 years old vehicle segment," he said.

While discussing the Q3FY21 earnings numbers and outlook for 2021, he said, “Sequentially the net interest margins (NIMs) are improving in the last two quarters.”

The company has recently raised USD 500 million in the international market. "Incrementally in the domestic bond market also, we are able to raise money at a lower cost for longer tenure. So that is helping us to bringing down our warrant cost and eventually it will help us to improve further and we are confident that we should be able to breach 7 percent in NIMs,” he said.

The company may do much lower than what has been planned for restructuring. So restructured portfolio will be much smaller, he mentioned.

In terms of credit cost guidance, he said, "We said it will remain between 2.7 percent and 2.8 percent. As of last December it was 2.59 percent, so that means we should be much lower than 2.7-2.8 percent. We should be around 2.5 percent levels is what it looks like in the next quarter. We should improve in the next year. We will aim at going back to the 2 percent by the end of next year.”