R Thyagarajan, the founder of Shriram Group, is a remarkable example of a financier who has successfully combined profit and social good. He has built a fortune by lending to low-income borrowers who are ignored by banks, and has given away most of his wealth to his employees. He also lives a simple life without owning a mobile phone or a luxury car.
The Shriram Group Story
The Shriram Group is one of India’s largest conglomerates, with businesses ranging from insurance to stockbroking. It employs 108,000 people and has a market value of over $10 billion. The group’s flagship company, Shriram Transport Finance Co., is the leader in financing commercial vehicles for India’s poor. It has more than 1.8 million customers, mostly small truck owners and drivers, who pay an average interest rate of 15%. The company has a low default rate of less than 3%, thanks to its rigorous screening process and close relationship with borrowers.
The group was founded in 1974 by R Thyagarajan, or RT as he is known, in the south Indian city of Chennai. He was inspired by the social philosophy of Ramakrishna Paramahamsa, a 19th-century Hindu mystic who advocated serving the poor as a way of worshipping God. RT wanted to prove that lending to people without credit histories or regular incomes was not as risky as it was perceived. He also wanted to offer a cheaper alternative to the informal lenders who charged exorbitant rates to the unbanked.
RT started with a small chit fund, a type of rotating savings and credit association popular in India. He then expanded into other financial services, such as consumer loans, insurance, and mutual funds. He also diversified into other sectors, such as engineering, property development, and education. He built a loyal and motivated workforce by paying them below-market wages but giving them generous bonuses and stock options. He also cultivated a culture of trust and empowerment, allowing his managers to make decisions independently.
The Philanthropic Gesture
In 2010, RT made a stunning announcement: he was giving away almost all his wealth to a handful of employees who had been with him since the beginning. He transferred his stake in Shriram Capital Ltd., the holding company of the group, to an employee welfare trust. The stake is now worth more than $750 million, making it one of the largest acts of philanthropy in India.
RT said he did not need the money for himself or his family. He lives in a modest house and drives a $5,000 car. He does not own a mobile phone or a computer. He spends his time reading books and newspapers, meditating, and advising the group’s businesses. He said he wanted to reward his loyal colleagues who had helped him build the group from scratch. He also wanted to ensure that the group’s values and vision would be preserved after his retirement.
RT’s generosity has earned him admiration and respect from his peers and the public. He has been hailed as a role model for ethical and responsible business leadership. He has also been recognized for his contribution to financial inclusion and social welfare in India. He has received several awards and honors, including the Padma Shri, one of India’s highest civilian honors, in 2013.
The Future Outlook
RT is optimistic about the future of the Shriram Group and its social mission. He believes that there is still a huge untapped market for lending to the poor in India, where about a quarter of the population does not have access to formal financial services. He also believes that the group’s business model is resilient and adaptable to changing economic conditions and customer needs.
He said he hopes that the group will continue to grow and innovate, while staying true to its core values of trust, transparency, and customer service. He also hopes that the group will inspire other companies to follow its example of combining profit and social good.
“I’m not doing anything great,” RT said modestly. “I’m just doing what I think is right.”
