India's shadow lenders build super apps as competition heats

Mumbai

INDIAN shadow lender Shriram City Union Finance is building a so-called super app to offer various financial products on a single digital platform, joining other major non-bank finance companies in taking on growing competition from fintech firms.

"We already are in the process of building a super app," said YS Chakravarti, chief executive officer of the company. "Three months from now, the super app should be ready, offering every financial product that a customer needs."

The move follows another major shadow lender Bajaj Finance, which has also been working on its consumer app, as the sector tries to play catch up after undergoing a crisis that saw a number of finance companies fold up.

India's central bank superseded the board of Reliance Capital, Srei Infrastructure Finance and Srei Equipment Finance in recent months, citing governance concerns.

Several Indian fintechs, including One 97 Communications, already offer most financial products on their apps, luring in customers in the country that is traditionally under banked but is increasingly turning to digital forms of transactions.

Last month, Shriram Group said it would merge Shriram City Union Finance with Shriram Transport Finance in a restructuring that will create the largest shadow lender to consumers in the country. The revamp comes when India's retail lending is picking up with consumers wanting to splurge on everything from two-wheelers to homes as a recovery takes hold in the country after the pandemic-induced slump.

The merger, which will see Shriram Finance manage 1.5 trillion Indian rupees (S$27.2 billion) worth of assets, would help the group bring together all its lending products under a single roof and cross-sell products. On a rough estimate, about 30 per cent of Shriram Transport customers could be interested in Shriram City's products, Chakravarti said.

"Five years from now, I would like 30 per cent of my disbursements to come from either tie-ups with fintechs or through our digital growth," Chakravarti said. BLOOMBERG