After completing his MA in Mathematics, Thyagarajan wanted a government job. His ambition, was to join the Indian Audit and Accounts Service, listen to music, read books and lead a quiet life. “My objective at that time was to conduct life peacefully. But things turned out very different,” shares Thyagarajan. The irony is striking. The man who did not want to be an entrepreneur ended up building one of India’s largest financial businesses. And that contradiction may be the key to understanding him.
Thyagarajan does not speak the usual founder’s language. He is almost suspicious of individual achievement. Asked about the creation of Shriram, he immediately corrects the premise. “Shriram Group has grown on its own. It is a product of evolution and not creation,” stresses Thyagarajan. Different people arrived at different points, took different responsibilities and collectively built something that became much larger than any individual.
That idea of collaborative effort runs through much of Thyagarajan’s philosophy of finance, management and wealth. And this is particularly relevant now, when the financial industry has changed almost beyond recognition.
The problem was the system and not the borrower
As an insurance professional, Thyagarajan encountered truck operators who were paying very high interest rates. Many were falling into financial distress because they could not afford the cost of borrowing. His reaction was surprisingly direct – to trust the Indian truck operator and lend him money. This is the original Shriram insight. The underserved borrower did not necessarily represent a weak economic opportunity. He represented an information problem. A conventional lender could look at the absence of formal documentation and see risk. Thyagarajan looked at the person, the business, the community and the cash-generating capacity around them.
Decades later, this remains central to the NBFC model in India. Technology has made underwriting faster, but it has not eliminated the underlying challenge of understanding borrowers who do not fit neatly into traditional financial categories.
Small ticket philosophy
One of the most telling parts of Thyagarajan’s account is his explanation for financing second-hand trucks. It was not presented as a brilliant strategic insight. It began with a limitation: Shriram did not have much money. A new truck cost about Rs 4 lakh at the time, while a used one cost around Rs 1.5 lakh. With the same amount of capital, the company could therefore finance two or three operators instead of putting everything into one new vehicle. “The idea was to reach as many people as possible with the limited capital we had. It was both a financial constraint and a conscious choice to serve the underserved,” highlights Thyagarajan. That sentence could almost describe the logic of modern financial inclusion. The difference is that today’s industry has much more sophisticated tools to pursue it: digital identity, credit bureaus, alternative data, automated underwriting and increasingly artificial-intelligence-based risk systems. But the essential question has not changed: how do you price the risk of people whom the mainstream financial system does not understand well?
Shriram’s original answer was to know them better. The industry’s current answer is increasingly to know them through data. The future of Indian retail finance will probably depend on combining both.
People make an institution
Thyagarajan’s faith in people goes well beyond customers. One of his most revealing anecdotes concerns a former colleague who wanted to leave a bank and join Shriram. Thyagarajan initially discouraged him because the chit fund business had a poor reputation. Eventually the colleague joined, was given responsibility for a branch and demonstrated that the business could be run efficiently and for the benefit of employees. Within three years, Thyagarajan and his colleagues handed the whole company over to him: “You are the person, you run it. You know how to do it much better than the way we have been managing it so far.” That is an unusual statement from a founder. But it may be the most practical explanation for how Shriram scaled. The founder’s role was not to know everything but to identify people who knew something he did not. “They came, that’s all,” puts Thyagarajan directly and refuses to accept that he was a magnet attracting the best.
The irony is that the financial industry has moved closer to Thyagarajan’s original proposition even as it has moved farther away from his methods. India today has far greater financial connectivity. Borrowers leave digital trails. Credit information is more accessible. Account Aggregator infrastructure and digital public infrastructure are allowing lenders to assemble information that was previously fragmented. Yet the attraction of relationship-based finance has not disappeared.
That helps explain the significance of MUFG’s entry into Shriram Finance. In April 2026, MUFG Bank acquired a 20 per cent stake in Shriram Finance for Rs 39,618 crore, making it an equity-method affiliate. MUFG said the investment was intended to deepen its position in India and contribute to financial inclusion, while Shriram’s annual report notes that the deal strengthened its capital base. The transaction is significant because it brings a global banking giant into a business whose competitive advantage was built around precisely the kind of local knowledge that large institutions have historically struggled to replicate.
Timing also matters. Shriram Finance’s chief executive said recently that the MUFG infusion leaves the company with no need for fresh capital for five years and supports continued credit growth of 18–20 per cent annually, with the company retaining its focus on retail rather than large corporate lending. In other words, the business Thyagarajan helped shape is entering its most institutional phase.
And that creates a central question: can a business that was built on trust, decentralisation and intimacy with customers retain those qualities while operating with global capital and on an enormous scale?
