A new Japanese promoter, a former banker, and a recipe for success
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 backers.
“There is group governance and expectations, thresholds, etc. The idea is to first ensure that we are fully committed to those expectations,” said Ravi Narayanan, managing director and chief executive officer. Mint in an interview. “The i’s will be dotted and the t’s will be crossed in the next 45-60 days.”
The non-banking finance company (NBFC), previously known as Fullerton India Credit Company Ltd and started operations in 2007, was acquired by Sumitomo Mitsui Financial Group (SMFG) in two tranches between 2021 and 2024.
Former chief Shantanu Mitra resigned with effect from June 16, shortly after SMFG signed a definitive agreement to acquire a 20% stake in private sector lender Yes Bank in May 2025.
With a new chief at the helm, the lender aims to reduce its share of loans that are unsecured or not backed by collateral, improve governance standards and gradually leverage parent SMFG’s relationships with Japanese conglomerates to attract business to markets where it operates.
Total assets under management as of September 30 ₹62,600 crore in loans related to real estate, personal loans, housing and commercial 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. ₹1.07 trillion at the end of the September quarter, up 15% year on year.
Narayanan, whose last role at Axis Bank was responsible for retail liabilities, branch banking and products, said it could take 12-15 months to achieve the level of management the promoter expects, given that the Japanese are “very disciplined and meticulous”.
Contrary to the perception that Japanese companies are conservative, their approach is more pragmatic, or “aggressively realistic,” Narayanan said.
“Yes, I want to gain share of wallet, be at a certain scale and size, and do multiple products so that the franchise is kind of protected through variables. But at the end of the day it has to be realistic, we have to anchor ourselves.”
The second line of action, he said, will ensure that within these governance norms the company can create a solid business and then grow it. “The franchise must have stable growth, must have platforms that can create sustainable growth and most importantly must be able to deliver results or revenues on a permanent basis.”
Narayanan, who is comfortable with equity after SMFG’s capital infusion, said the additional capital is welcome and the NBFC is open to raising debt to grow the franchise sustainably. SMFG invested in FY25 ₹4,300 crore equity included in SMFG India Loan ₹1,300 crore in April 2024 and ₹3,000 crore in December 2024.
Creating group synergy
A major part of SMFG India’s credit strategy is built on the group synergies of its parent group company, Sumitomo Mitsui Banking Corp. (SMBC). But given the NBFC’s current scale and target markets, Narayanan said it will take time to achieve these synergies.
SMBC has long-standing partnerships with companies across a variety of industries, including Honda, Suzuki and Hitachi. The difference arises because SMFG India Credit operates largely in rural markets where these companies have limited presence. Of its 989 branches, only 3% are in first-tier cities, 16% in second-tier and the majority in third-tier and other towns.
“There are expectations, but it won’t happen overnight,” Narayanan said, adding that he was hopeful of sustainable growth as rural markets begin to mature.
Balancing secure and insecure growth
In September, Crisil Ratings reaffirmed the lender’s long-term rating at AAA/stable, citing continued support (equity and debt) from SMFG in both normal operations and emergencies.
“SMFG has senior representation on the board and various committees of the SMICC group and participates in key decisions taken by the company. India remains one of the focus markets of the SMFG Group,” analysts at Crisil said in September.
The new chief, who has historically focused on unsecured loans, said he aims to have 55% of the portfolio secured and the rest unsecured. According to Crisil, the proportion of unsecured loans stood at 52% in FY25.
“I accept the fact that we are on the lower end of the spectrum (in terms of share of secured loans). This is not for any other purpose, but simply to meet my desire to be a non-volatile and stable franchise,” he said.
He added that secure growth will be supported by wholly-owned affordable housing subsidiary SMFG India Home Finance Co (formerly SMFG Grihashakti), which has started expanding in the last three to four years. The company also plans to increase lending across its real estate portfolio, including in rural markets where it has its largest presence.
The push for more secured loans does not mean abandoning high-yield unsecured loans, which have been the core strength of the business for 15-18 years and are vital to margins.
“I’m not saying I’m going to abandon high yield and suddenly start doing only big LAP or big ticket loans,” Narayanan said, adding that the portfolio needs to find some sort of “normalization benchmark.” He said the plan is to eventually reduce the share of unsecured loans to a comfortable level of 45-50%.
