Shriram Finance raises $306m to expand MSME lending and green financing

Shriram Finance Limited has secured a significant $306 million in External Commercial Borrowings (ECB) from major Multilateral and Bilateral Development Financial Institutions, reinforcing its position as a leader in structured finance. This funding, raised under its Social Finance Framework, attracted participation from Asian Development Bank (ADB), Japan International Cooperation Agency (JICA), and Exim Bank of India (EXIM). The transaction is designed to provide long-tenor financing, allowing the company to enhance its lending capacity while diversifying its funding sources.

This latest offshore borrowing follows a series of large-scale fundraising initiatives by Shriram Finance. In February 2025, the company secured a $500 million SACE Push facility, and in December 2024, it raised a $1.2 billion syndication facility. With this latest capital infusion, the company has successfully raised over $2.8 billion in offshore funding within the current financial year, strengthening its ability to support critical sectors such as Micro, Small, and Medium Enterprises (MSMEs), electric mobility, and sustainable financing solutions.

Why Is MSME Financing a Key Focus for Shriram Finance?

MSMEs form the backbone of India’s economy, contributing nearly 30% of the nation’s GDP and 45% of total exports. However, despite their economic significance, MSMEs often struggle with access to affordable credit due to a lack of collateral and stringent banking requirements. Recognizing this gap, Shriram Finance has positioned itself as a major lender to small businesses, tailoring financial solutions to meet the unique needs of this sector.

With the latest round of ECB funding, the company plans to expand its MSME lending portfolio, ensuring greater credit availability for small businesses across India. The partnership with ADB and JICA will enable Shriram Finance to offer specialized business loans, support women-led enterprises, and fund green energy transitions, including financing for electric vehicles (EVs) and low-emission commercial vehicles. Additionally, its collaboration with EXIM Bank will support MSME exporters in accessing new global markets, helping to boost India’s export competitiveness.

How Does This Investment Support Green Financing and Electric Mobility?

A significant portion of the newly raised funds will be directed toward sustainable financing, particularly in electric mobility and low-emission vehicle loans. As India moves toward its net-zero targets, financial institutions like Shriram Finance play a crucial role in accelerating the transition to clean energy solutions.

With the Indian government actively promoting the Faster Adoption and Manufacturing of Electric Vehicles (FAME) initiative, demand for electric two-wheelers, commercial EVs, and battery-operated public transport is on the rise. However, one of the biggest barriers to EV adoption remains high upfront costs and limited financing options. By using part of the $306 million ECB to support affordable financing for EV purchases, Shriram Finance is directly addressing these challenges, making sustainable transportation more accessible to businesses and individuals.

ADB’s India Country Director, Mio Oka, noted that this financing agreement aligns with the bank’s broader commitment to sustainable development and financial inclusion. She highlighted that the partnership with Shriram Finance would help bridge the MSME financing gap while accelerating electric mobility adoption, contributing to India’s long-term climate goals.

What Does This Deal Mean for Shriram Finance’s Growth Strategy?

For over four decades, Shriram Finance has been a key player in India’s non-banking financial sector (NBFC), focusing on asset-backed lending, vehicle financing, and small business loans. With an asset under management (AUM) exceeding ₹2.54 trillion, the company has built a vast lending portfolio, serving over 9.4 million customers through a nationwide network of 3,196 branches.

By securing long-tenor external borrowings from global financial institutions, the company is strengthening its ability to offer stable, long-term credit solutions at optimized costs. Access to international development finance also reduces dependence on domestic borrowing, allowing Shriram Finance to extend lower-interest loans to MSMEs and green energy projects.

Umesh Revankar, Executive Vice Chairman of Shriram Finance, emphasized the significance of securing funding from global financial institutions. He noted that these partnerships reinforce the company’s commitment to sustainable lending, financial inclusion, and innovation in structured finance. The strong backing from institutions such as ADB, JICA, and EXIM Bank highlights the company’s credibility in international financial markets.

How Does This Fit Into India’s Broader Financial Landscape?

India’s non-banking financial companies (NBFCs) have seen a surge in demand for alternative financing solutions, especially as banks tighten lending to high-risk sectors. NBFCs like Shriram Finance play a critical role in filling this credit gap, particularly for underserved sectors such as MSMEs, commercial transportation, and rural enterprises.

The success of Shriram Finance in raising offshore funds signals strong investor confidence in India’s financial sector. It also highlights a growing trend among Indian NBFCs to tap into international markets for long-term capital, reducing reliance on domestic funding sources. This trend is expected to continue as regulatory frameworks evolve to encourage foreign investments in financial services.

With its strategic focus on expanding MSME lending, green financing, and global capital partnerships, Shriram Finance is well-positioned to navigate India’s evolving financial landscape. The latest $306 million ECB transaction further strengthens its role as a leader in structured finance and responsible lending, reinforcing its mission to drive economic progress and sustainability across India.