It was by happenstance that I came to learn about the Shriram Group and G S Sundararajan (Sundar), MD of Shriram Capital, the other day. Of course, I have known that Shriram was a huge player in the chit fund business and did a lot of truck financing. This only reinforced my image of the company as a traditional, Chennai based, family/promoter-run enterprise. Not the kind of company that I would typically expect anybody in my circle to be working in. So I was intrigued when I heard that Sundar, who had earlier led Fullerton and Citi’s SME businesses, had joined them recently. What is an IIM(A) alumnus, with an enviable track record with MNCs, doing in a hidebound company like Shriram? And what is Shriram’s gameplan here?

I decided to seek out Sundar for a meeting to get some clarity. And before the meeting, I did my own research on Shriram, and found, to my surprise, that:

1. Shriram is a specialist in serving the low income group. Most of its 50 lakh customers live in small towns, and it is the first provider of financial services to 98% of its customers! Given that it started in 1974, the model predates C K Prahlad’s “Fortune-at-the-bottom-of-the-pyramid” mantra by well over a couple of decades!

2. Shriram has a unique company culture where its people are empowered to take most decisions. Its seven CEO’s, who head its different finance arms, have come through the ranks and have been with the company for 25+years!

3. It’s a darling of the Private Equity world with investors from across the globe (Japan, US, Europe) vying to invest. Interestingly, it has hard core PEs like TPG Partners and socially conscious specialist funds like Leapfrog as investors.

4. Shriram Group has created a Trust - Shriram Employee Welfare Trust - which owns Shriram Capital. All employees who have helped the company grow are beneficiaries of this trust, and therefore have ownership in the company. This happened recently in 2008.

So when Shriram Group decided that it needed to put its hat in the ring for a banking license, it was clear that it would be a Bank that would cater to the unserved needs of its existing customer base in the middle to lower income category. And that it would leverage its strong infrastructure of agents, branch offices and collection network to succeed. It appeared that their challenge would be to effect the necessary transformation that’s required to perform as a Bank, where the scale of risk and reward seem of a different magnitude.

Sundar confirmed this when I met with him, that his key charter at Shriram is to create the blueprint for a new Bank, which, unlike the rest of the private sector banks, would be focused on the bottom-of-the-pyramid. He said that he has always nourished the dream of building a bank that would demonstrate that the small and medium customers are a goldmine, and not a liability! And who could be a better partner for him than the Shriram Group, which understands this customer base and has proven the model in many different ways? So Sundar took the plunge, and now has his heart set on making this dream come true. He believes that, with the right mentoring and coaching (something he has done very effectively in his earlier stints), he would be able to morph most of Shriram Capital’s homegrown staff for the new Bank. But how will he, a lateral hire into an organization where most managers have been around for decades, manage to get their acceptance?

Sundar is banking on his traditional middle-class upbringing, and his “no ego” workstyle to help bridge this chasm. As also on his years of training as a cricketer - he was captained of his university cricket team during his college years. He believes that the lessons he learned growing up - in humility, discipline, and team-play - have allowed him to mingle with employees at all levels, and learn from them. His people have sworn by him in the past - when he started Fullerton, almost his entire team at Citi was willing to go work for him and, even today, they are just a call away. But then, at Citi, he had a team that he had built ground up, while at Shriram, he has a team that he has inherited. Can he repeat the same magic here?

We will wait and watch…and we will sure hope that Sundar, and Shriram Capital, succeed big, for this could then well become the model for a true Indian Bank!