Shriram Finance Seeks RBI Nod for Primary Dealer License to Underwrite Govt Debt

By siliconindia  |  Tuesday, 08 April 2025, 11:23:07 AM IST

Shriram Finance Seeks RBI Nod for Primary Dealer License to Underwrite Govt Debt
Shriram Finance Ltd., India's largest non-banking financial company (NBFC), is applying for the Reserve Bank of India (RBI)'s regulatory clearance to become a primary dealer in the government securities market. This reflects the company's plans to further its presence in India's fast-developing bond market, with growing infrastructure spending and international investor participation.
The company has reportedly approached the RBI for seeking approval to form a standalone entity that will function as a primary dealer (PD), sources familiar with the development said. Such dealers are critical for absorbing government bond auctions and maintaining adequate liquidity in the sovereign debt market. The company would not comment on the development, while the RBI is yet to respond to an email query.
At present, RBI allows only a handful of entities to operate as primary dealers because of their role in supporting the government's borrowing programme. On April 7, figures from the central bank showed that Indian federal government bonds outstanding amounted to Rs 112.5 trillion ($1.3 trillion). At the moment, there are seven independent PDs and 14 banks with PD units.
With India set to be included in JPMorgan Chase & Co.'s emerging-market bond index soon and increasing interest from long-term institutional investors such as insurers and pension funds, volumes in bond trading have been increasing sharply. Shriram Finance's possible foray into this territory follows the trend and can help the NBFC further integrate with the financial ecosystem as a whole.
The Chennai-headquartered company already has a diverse portfolio of loan products such as vehicle loans, personal loans, and gold loans. Obtaining a PD license would be a strategic move towards expanding its financial services business and contributing more to India's capital markets.

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