What was the problem you were grappling with?
Less than a year after taking over as MD of Shriram Transport Finance Company (STFC) in 2012, troubles began for the commercial vehicles finance sector. The Reserve Bank of India introduced stricter norms for securitisation and the economy started to slow down; and steep fuel price hikes made many businesses unviable. The segment was awash in red ink. Bad loans started piling up and so did my stress as the man at the helm of India’s largest truck financer.
Whom did you approach for advice?
I reached out to our Founder, R. Thyagarajan.
What was the advice you received?
He said to me, “Trust begets trust.” There is a social dynamic in relationships known as the Law of Reciprocity—when you’re nice to someone, it’s a natural human instinct to respond positively. Unfortunately, the opposite is true as well. When someone acts cruelly or is hostile towards us, we often respond in even more cruel and hostile ways. We had put our trust in the truckers by lending to them. We didn’t abandon them in times of stress, and decided to provide them with additional support.
How effective was it in resolving the problem?
This relationship-based model that we developed worked to our advantage not just during the bad times, but our customers stayed loyal to us even when things started improving, and often recommended STFC to all other truckers as a trusted brand that wouldn’t abandon them when times were tough. The trust-based lending worked and got us far ahead of the competition. Today (as of September 1, 2022), the company has a market cap of `35,952 crore, assets under management of almost Rs 1.3 lakh crore and over two million customers.
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