The Reserve Bank of India (RBI) has approved the overall plan for arrangement and amalgamation of financial services business of Shriram Group. On Thursday, the shares of Shriram Transport Finance and Shriram City Union Finance declined on the exchanges.
In its regulatory filing, Shriram Transport “We would like to inform you that the Reserve Bank of India vide its letter dated June 15, 2022 has issued NOC on the scheme with general and general conditions, as generally prescribed in similar approvals. It happens.”
Shares of Shriram Transport closed on BSE below 1145.15 4.45 or 0.39%. Shriram City Union shares expired less than 1631 each 16.90 or 1.03%.
The overall plan of Shriram Group includes:
Merger of Srilekha Business Consultancy with Shriram Capital (SCL).
– Dissolution of the undertaking from SCL, carrying on of the business of financial services and other businesses, and transfer and vesting in Shriram Investment Holdings (SIHL).
– a) Life Insurance and b) General Insurance, and the transfer and demerger of undertakings from SCL having vested in the same a) Shriram LI Holdings (“SLIH”), b) Shriram GI Holdings Private Limited (“SGIH”) respectively.
– Amalgamation of SCL (along with its remaining undertakings and investments) with Shriram Transport Finance Company (STFC).
– Amalgamation of Shriram City Union Finance Limited (“SCUP”) with STFC.
The scheme was announced in December last year.
The Group expects that the proposal to amalgamate SCUF with STFC will be highly beneficial to all stakeholders, by bringing together the Group’s capabilities and presence in the categories of Transport Finance and Retail Finance, and in the process create a larger financial lending . With both these businesses the entity expands the range of services and products offered to the customers and the resultant benefits of scale and synergy of operations.
In a December 13, 2021 statement, the group said that the proposed merger of SCUF with STFC would further strengthen STFC’s leadership position in the ‘commercial vehicle market’. Post the proposed merger, and under a broad understanding of SCUP’s credit culture, the integrated entity will be able to launch retail finance products in locations where SCUF has not been able to penetrate. The combination of the operations of these two entities with their vast network of customers will uniquely position the group to ensure that each line of business is expanded to its full potential on the strength of one large, amalgamated entity. As a single entity, it will be able to achieve economies of scale in operations and lower financing costs.