When V Venkata Subbareddy from Nandyal started his business 12 years ago, it was Shriram Transport Finance Company that had helped him buy a used tractor, followed by seven tippers and an excavator. The transport finance company stepped in again with a ₹30-lakh loan, when 45-year-old Subbareddy took his business to the next level by buying a stone quarry mine earlier this year.

Spotting the opportunity for itself, Shriram Transport Financing (STF) has now opened a new avenue for growth by financing smaller business needs of its old and loyal customers.

Having been into commercial vehicle financing for over three decades now, STF forayed into the small and medium enterprise (SME) loans business about six months ago. It expects its loan book to reach ₹500 crore and ₹1,000 crore by end FY16 and FY17 respectively. The projection is to touch ₹10,000 crore in the next four-five years.

The non banking finance company expects about 10 per cent of its existing customer base of two million to boost its SME loans in the next five years.

“We want to service our existing customers (who have reached a particular level in their business and want to upgrade or do something new) come to us rather than going anywhere else. They may want to add a partner or have a sibling joining them or children wanting to do something new,” said Umesh Revankar, Managing Director and Chief Executive Officer of the company, said.

The SME loans, secured against property, will be extended to existing customers who have been with the company for five years. The average ticket size is around ₹10 lakh and lending rate is in the range of 17-18 per cent.

The company’s assets under management worth ₹63,252.97 crore grew about 14 per cent in the first six months of the financial year, over the same period last year.

Revankar expects its total AUM to grow at 12-15 per cent over the next five years. He expects SME loan business to contribute 10 per cent to the total AUM in five years’ time.

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