47404 - DCM STFC Sec III

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Summary of Investment Information

Project Number

47404

Company Name

SANSAR TRUST DEC 2022

Date SPI Disclosed

Nov 14, 2022

Country

India

Region

South Asia

Projected Board Date

Dec 16, 2022

Environmental Category

FI-2 - Limited

Status

Completed

Last Updated Date

Jun 11, 2025

Department

Regional Industry - FIG Asia & Pac

Industry

Financial Markets

Previous Events

Approved : Dec 16, 2022
Signed : Dec 22, 2022
Invested : Dec 30, 2022

Sector

Finance Companies

Project Description

The proposed project envisages a rupee denominated investment into securitized assets of Shriram Transport Finance Company Limited (STFC) through Pass Through Certificates (PTCs) of up to USD 300 million equivalent (of which up to USD150 million will be through IFC’s own account and remaining through mobilization). The proposed project supports vehicle financing for micro, small and medium enterprises (MSME), particularly the micro segment, with a focus on the low-income states (LIS) and rural regions of India. The Covid-19 pandemic has aggravated the already weak economic environment for this segment since they are less resilient to exogenous shocks. Through this project, IFC will provide liquidity to the extremely important MSME segment through NBFCs, and enable resilient business recovery.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	152.50
Equity

IFC's loan to the financial institution described in this SII is targeted for on-lending to the following sector(s):

Product Type	Use of Proceeds
Quasi-Equity	Loans to MSME (mix of Micro and SME)

IFC's Definitions of Targeted Sectors can be found here.

Development Impact

Stakeholders impact: Improved access to finance for MSMEs: The MSME sector is extremely critical for the development of the country as it accounts for over 30% of the GDP and provides employment to more than 110 million people. The Covid-19 pandemic had severely impacted the economic environment for the MSME sector. In particular, commercial vehicle (CV) financing was amongst the worst-hit segments in the financial sector given mobility restrictions and low truck utilization rates. This segment is recovering from the pandemic, and demand for CVs, especially used CVs, remains buoyant given the growing economy, and the focus on infrastructure. The proposed investment would support access to CV finance to MSMEs, particularly micro enterprises, focusing on MSMEs in underserved areas like low-income states and rural regions of India. Market impact: Beyond the project level outcomes, IFC anticipates the investment to promote greater inclusiveness of underserved segments like MSMEs in underserved regions like LIS by demonstrating the commercial viability of serving these segments at scale. The project also supports integration of the securitization market in India, by attracting long term capital from investors.

IFC will provide both financial and non-financial additionality through this project. Financial additionality will be provided in the form of: (i) Resource mobilization, derived from mobilization of additional funding from another investor. With respect to non-financial additionality, IFC will help in terms of: (i) Non-commercial risk mitigation. IFC’s role as an anchor in this transaction will be a vote of confidence in STFC, providing comfort to other investors.

E&S Category Rationale / Risks and Mitigation

The project entails a rupee denominated investment into securitized assets of Shriram Transport Finance Company Limited (STFC). The objective is to support commercial vehicle financing for Micro, Small and Medium Enterprises with focus on the low-income states of India. Given the nature of the company's operations which is engaged primarily in pre-owned commercial vehicle financing, the level of E&S risks is considered as medium-low. Hence, the project is categorized as Category FI-2 in accordance with IFC's Environmental and Social Sustainability Policy. The main E&S risks and impacts of the project derive from STFC's lending and financing activities, its labor and working condition practices across the company and its capacity and procedures in place to manage these risks. The project will not support coal-related activities and higher risk business activities that may involve a) involuntary resettlement, b) risk of adverse impacts on Indigenous Peoples, c) significant risks to or impacts on the environment, community health and safety, biodiversity, cultural heritage, or d) significant Occupational Health and Safety risks. For this investment, the E&S requirements will include the IFC Exclusion List and national E&S laws, and regulations related to emission standards for vehicles. As part of the Project, the STFC will be required to: (i) continue implementing its Environment and Social Management System (ESMS) procedures; (ii) remain committed to applying the labor standards established by IFC Performance Standard 2 (PS2); and (iii) submit a periodic report to IFC.

STFC is an existing client with a satisfactory ESMS in place and an E&S officer responsible for implementing the ESMS. The level of ESMS implementation is adequate for the E&S risk associated. The ESMS details the policy, and procedures, to be followed for all transactions where applicable. The current ESMS will be applied to the proposed IFC project as well. The human resource policies and procedures of STFC are in line with IFC's requirements under PS2: Labor and Working Conditions and company follows the applicable Life and Fire Safety requirements.

Contacts

For Inquiries About the Project, Contact

Shriram Transport Finance Company Limited
Sandeep Balagopalan
AVP – Corporate Finance and Treasury
Fax: +91 22 40959596
sandeep@stfc.in
G Block, BKC, Bandra East, Mumbai 400051, Maharashtra, India
https://www.stfc.in/

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Complaints may relate to environmental and social harm regarding any aspect of the planning, implementation, or impact of a project or sub-project, and can be made by any individual, group, community, entity, or other party affected or likely to be affected by the environmental or social impacts of an IFC- or MIGA-financed business activity.

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CAO receives and addresses complaints in accordance with the CAO Policy, which can be accessed at: https://www.cao-ombudsman.org/policies-guidelines.

This Summary of Investment Information (SII) is prepared by IFC to disclose a factual summary of the main elements of the potential investment. It also includes findings and recommendations related to environmental and social considerations regarding this potential investment. The purpose of the SII is to enhance the transparency of IFC’s activities. For any project documentation or data included or attached herein, whether prepared by the project sponsor or otherwise, authorization has been given for public release by the project sponsor. IFC considers that this SII is of adequate quality for release to the public, but has not necessarily independently verified all of the project information therein. It is distributed in advance of IFC Board of Directors’ consideration and may be periodically updated thereafter. Board dates are estimates only and this document should not be construed as presuming the outcome of the Board Directors’ decision. The following SII is disclosed in accordance with IFC's Access to Information Policy (AIP) that went into effect on January 1, 2012.

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