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RBI Approves Shriram Group’s Merger of Financial Services Businesses

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Shriram Group receives RBI nod for merger of financial services business

The Reserve Bank of India (RBI) has approved Shriram Group’s composite scheme of arrangement and amalgamation of financial services businesses. The scheme was announced in December 2021.

  • The approval has been given for the merger of Shriram City Union Finance (SCUF) and Shriram Capital Ltd. (SCL) with Shriram Transport Finance Company (STFC), to form India’s largest non-banking financial company (NBFC).

Apart from RBI’s approval, the Shriram Group must also secure approvals from Insurance Regulatory and Development Authority (IRDAI) and other regulators.

The Shriram Group’s Composite Scheme encompasses the following:

i. The amalgamation of Shrilekha Business Consultancy with Shriram Capital Limited (SCL).

ii.The demerger of undertaking from SCL, carrying on the businesses of Financial Services and other businesses, and the transfer and vesting thereof into Shriram Investment Holdings (SIHL).

iii.The demerger of SCL undertakings engaged in the Life Insurance (LI) and General Insurance (GI) businesses, and their transfer and vesting into Shriram LI Holdings (SLIH) and Shriram GI Holdings Private Limited (SGIH), respectively.

v.The amalgamation of SCL (with its remaining undertaking and investments) with Shriram Transport Finance Company (STFC).

vi.The amalgamation of Shriram City Union Finance Limited (SCUF) with STFC.


The merger will enable the Shriram group to consolidate all of its lending products under one roof, including commercial vehicles, two-wheeler loans, gold loans, personal loans, auto loans, and small business finance.

  • Shriram Group currently manages assets worth more than Rs 1.8 lakh crore.

Major Inferences of The Amalgamation

i. The proposed merger of SCUF & STFC will benefit all stakeholders by combining the Group’s strengths in the areas of transport finance and retail finance.

ii.Its aim is to combine these two businesses to form a larger financial lending organisation, broaden the range of services and products available to clients, and boost the benefits of scale and operational synergies.

iii. The group would also concentrate on digital lending, with existing and new financial products available through a newly developed Super App, which would be released in Q1 of FY24.

Heads of the Amalgamated Entity:

  • Umesh Revankar, Executive Vice President and CEO of STFC, will serve as Vice-Chairman
  • YS Chakravarti, MD-CEO of Shriram City, would serve as MD and CEO

RBI Lifts the Business Restrictions Imposed on Mastercard Asia / Pacific Pte. Ltd

The Reserve Bank of India (RBI) has lifted restrictions imposed on Mastercard Asia/Pacific Pte. Ltd, a payment gateway based in the United States (US), for failing to comply with local data storage requirements.

  • The restriction has been lifted with immediate effect owing to Mastercard Asia/Pacific Pte. Ltd.’s satisfactory compliance with the Storage of Payment System Data.

Mastercard is registered as a Payment System Operator (PSO) under the Payment and Settlement Systems (PSS) Act and is authorised to operate a card network in India.

  • Other major card networks in India include Visa, a US-based card network and RuPay, which is run by the National Payments Corporation of India (NPCI).


On July 14, 2021, RBI restricted Mastercard Asia/Pacific Pte. Ltd. from onboarding new domestic consumers (debit, credit, or prepaid) onto its card network due to non-compliance with the RBI’s Storage of Payment System Data.

Storage of Payment System Data

As not all system providers in India store payment data, it is essential to have unfettered supervisory access to data held with these system providers in the payment ecosystem in order to ensure effective monitoring. It establishes the following requirements:

i. All system providers must ensure that all data relating to payment systems they operate is stored in a system located only in India.

ii.The whole end-to-end transaction details, information collected, carried, & processed as part of the message or payment instruction should be included in this data.

iii. If necessary, the data for the foreign leg of the transaction can also be stored in the foreign nation.

Foreign payment processors can transfer card storage data abroad for smoothing flow provided they delete it within 24 hours, according to RBI regulations.


The RBI tightened data storage norms for PSOs in India, which required all PSOs to provide detailed “compliance certificates” to RBI twice a year from FY22, signed by their respective CEOs and MDs, confirming adherence to all RBI regulations regarding payment data security and storage.

About Reserve Bank of India (RBI):

Governor – Shaktikanta Das
Deputy Governors – Mahesh Kumar Jain, Michael Debabrata Patra, M. Rajeshwar Rao, T. Rabi Sankar
Establishment – 1st April 1935
Headquarters – Mumbai, Maharashtra