India's largest auto loan provider, Shriram Finance, is pivoting to green finance, targeting Rs 5,000 crores in EV loans and clean mobility infrastructure.
24 Sep 2025 | 6592 Views | By Shahkar Abidi
The year was 2002. Shriram City Union Finance, then a rising but little-recognized player from south India, faced an unwritten embargo: North India’s all-powerful two-wheeler dealerships, especially those of a behemoth with the then 44% national market share, refused to allow this southern upstart onto their showroom floors.
YS ...
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The year was 2002. Shriram City Union Finance, then a rising but little-recognized player from south India, faced an unwritten embargo: North India’s all-powerful two-wheeler dealerships, especially those of a behemoth with the then 44% national market share, refused to allow this southern upstart onto their showroom floors.
YS Chakravarti, then Business Head, didn’t take no for an answer. Instead, he went quite literally outside the system. “We would sit outside and do business,” he recalled. With makeshift tents and umbrellas pitched just beyond the iron gates of the OEM showrooms, Shriram’s teams issued attractive loans, discounts, and fuel incentives.
The real 'jugaad', though, was in alignment with rival-brand dealers, who gladly supported an interloper financing a few extra units on their turf. Soon the numbers added up. Dealers that stonewalled Shriram began losing customers. Some of showroom footfalls migrated into Shriram’s makeshift loan stalls, pushing the once-resistant original equipment manufacturer (OEM) to ultimately partner with Shriram City Union Finance, recognizing the opportunity and threat alike.
By FY2013-14, the company had emerged as India’s largest two-wheeler financier by volumes—its financing believed to cover over 750,000 vehicles annually at the time. In Q1 FY26, the two-wheeler segment has grown to a formidable asset under management (AUM) of Rs 15,856 crores, with Shriram now financing 7% of electric two-wheelers on loan across India and targeting a leap to 20% market share in the years ahead.
Learning the Trucking Way
Following unconventional methods to penetrate into the two-wheeler markets weren't just one instance of “learning by doing" for Shriram Group. Likewise, in another example, in a bid to crack the commercial vehicle market in Andhra Pradesh and Telangana circa 2013-14, Chakravarti, acting on the counsel of Shriram's founder R. Thyagarajan, orchestrated an experiment: top executives, himself included, directly operated commercial trucks for four years. They personally managed the trucks, drivers, routes, insurance headaches, and day-to-day accounts, remitting loan installments from actual vehicle earnings.
Learning was invaluable. As Chakravarti—now Managing Director and CEO—admitted, the company did not always turn a profit during this stint. But the firsthand experience was transformative. The team encountered and learned to solve for frequent payment delays, unsupportive insurance companies, fraudulent spare part swapping, and opportunistic cannibalization of vehicles.
These livedin insights helped forge a robust new approach to loan origination, asset valuation, and collections. What had begun as an experiment ultimately defined the company’s lending standards, distinguishing it in a nation where asset and operational risk often lurk beneath the surface.
Growth and Diversification
The growth trajectory of Shriram Finance is, in many ways, inseparable from the journey of its leader. Chakravarti’s first days at Shriram Chits Andhra Pradesh Pvt. Ltd. in 1991 were spent in small-town Nellore, pushed instantly into charge of a branch, managing teammates with far more experience. “I quickly realized they had more knowledge than me,” he says. “So I made sure not to act smart. I chose to learn with them, not lead over them.”
Rising in the corporate hierarchy, Chakravarti currently holds the position of Managing Director and CEO after the megamerger of Shriram Capital, Shriram City Union Finance, and Shriram Transport Finance in 2022. Over the years, Shriram Finance has quietly but firmly cemented its position as one of India’s leading non-banking financial companies (NBFCs), building not just a sprawling footprint, but a deeply diversified portfolio that now spans the length and breadth of the Indian mobility landscape.
From financing second-hand commercial vehicles in small towns to funding cleaner, greener buses on urban roads, the Shriram story moved slowly and gradually to scale. With 3,225 branch offices, 580 rural centers, and close to 79,186 employees, the company’s reach is vast and deeply rooted, especially in India’s semi-urban and rural heartlands. Its lending portfolio reflects that breadth. Commercial vehicle loans remain the company’s backbone, accounting for Rs 1,23,132 crores in Assets Under Management (AUM), making up 45.23% of its total loan book in Q1 FY2026.
But the portfolio today is far more layered. In the commercial vehicle space, Shriram Finance had an AUM of Rs 1,23,132 crores which is about 45.23% of total AUM in Q1 FY26. Passenger vehicle financing contributes Rs 56,635 crores (20.80% of AUM), followed by a growing presence in the construction equipment space, which currently stands at Rs 16,535 crores (6.07%). Agricultural lending also finds a place in the mix: Rs 5,827 crores towards tractors and farm equipment.
Meanwhile, the segment where Shriram once began to make its name, i.e., two-wheeler finance, holds steady with an AUM of Rs 15,856 crores, or just under 5.82% of the total. Today, Shriram Finance is looking to balance the company’s legacy focus on commercial vehicle lending, over 70% of AUM even now, with a push into MSME, two-wheeler, consumer, and green finance. “This share will come down, maybe to 60%. But it won’t go down to 30%, that’s clear,” he says, emphasizing the need for broad-based but rooted growth. "We are excited to announce that Shriram Finance is on track to approach Rs 3 lakh crore in Assets under Management during FY 2025-26." he added.
Technology underpins this strategy: faster digital loan origination, streamlined credit approvals, tailored mobile-first offerings, and better customer service are all being rolled out to stay a step ahead in a crowded field. “It’s a blend of value-driven decisionmaking, digital ambition, and inclusive growth, suited for a financial institution operating in a country undergoing rapid economic and societal transformation.” Chakravarti points out.
But it’s not the numbers alone that signal where the company is headed. Alongside its diversification, Shriram Finance is making an emphatic bet on green finance. At the center of this push is an ambitious target: building a Rs 5,000 crore green finance portfolio within the next three to four years. As Chairman Jugal Kishore Mohapatra in his latest address during the annual general meeting (AGM) put it: “Furthering our commitment to sustainable growth, we brought all green financing efforts under Shriram Green Finance, with a focussed ambition to build an AUM of Rs. 5,000 crores over the next 3–4 years. Additionally, our efforts into electric vehicle financing and sustainable mobility solutions reflect our role in enabling India’s transition to a cleaner, greener future.”
The company is investing in every layer of India’s clean mobility ecosystem, starting with direct loans for electric vehicles, whether affordable e-scooters for last-mile delivery agents or electric buses for urban transport fleets. Shriram is also stepping up to fund the infrastructure that supports EV adoption, from battery-swapping stations to public and private charging networks. Additionally, the company is also pushing into retrofitting, helping older vehicles transition from combustion engines to electric drivetrains.
Cost-effective and environmentally responsible, it’s an approach aimed squarely at small fleet owners and micro-entrepreneurs who can't afford to replace entire vehicle inventories. Shriram’s green finance ambitions extend to co-creating a mobility ecosystem through partnerships with EV manufacturers like Montra, Bajaj, TVS, Hero, Ola Electric, Ather, Ape, Mahindra, and Tata Motors. "In line with evolving market demands, we are strengthening electric vehicle financing solutions to support the shift towards sustainable transportation". "At the same time, we are enhancing our digital infrastructure to streamline loan processing, ensuring a faster, more seamless experience for our customers." the top executive continued.
A Competitive Landscape
The automotive financing industry which operates in an intensely competitive environment has some of the biggest players in the form of HDFC Bank, Bajaj Finance, State Bank of India, Kotak Mahindra Prime, Hero FinCorp, and Axis Bank who all dominate the two-wheeler loan sector, offering attractive interest rates and streamlined digital experiences. HDFC’s muscle lies in urban distribution; SBI brings unmatched deposit-funded pricing; Bajaj and Hero FinCorp leverage captive product financing and dealer reach.
Within this competitive landscape, Shriram Finance' s strength lies in its early forays into rural and semi-urban India built grassroots brand loyalty, allowing it to penetrate segments where banking penetration remains thin. And now, by targeting green mobility both electric two-wheelers and mass-transit solutions, it is staking a claim at the intersection of mobility innovation and financial inclusion. Offering a glimpse into the company’s granular approach to risk profiling,
Chakravarti described how his team begins by asking fundamental but crucial questions about a prospective borrower’s livelihood. “We first try to understand the sector the customer will be operating in,” he explained. “What kind of goods will he be transporting? Where will he park his truck to seek loads? How many trips can he realistically make in a month?” From there, the analysis deepens. What's the likely expenditure? What kind of revenue might he generate? Only after walking through the prospective operator’s likely cash flows does the team determine what loan amount is viable.
“It’s essential to work closely with them to understand these intricacies, like what marketplace they’re going to operate in, what kind of demand exists there, and what types of loads are typically available,” Chakravarti added. “You have to know all of that to build the right kind of financial solution.”
Regulation, Digital Disruption, and Cost of Funds
The NBFC sector is facing a moment of reckoning. The Reserve Bank of India has, in recent years, tightened the screws, imposing risk-based capital requirements and bringing NBFC regulations closer to the banking sector. Simultaneously, rising risk weights on funds borrowed by NBFCs have squeezed net interest margins. Shriram, on its part is shifting gears into higheryield lending categories, taking advantage of overseas borrowings, and tweaking lending rates to sustain its net interest margin at 8.11% as on Q1 FY26. These moves, paired with investments in analytics and fintech collaboration, have enhanced risk management and expanded reach, especially in rural and semi-urban markets once neglected by larger banks.