Despite higher lending costs, credit off-take has risen in India in recent months due to a pick up in economic activity from pandemic lows, which has driven robust earnings for lenders, including for Bajaj Finance Ltd.

That also helped Shriram Finance, one of India's largest retail non-banking financial companies (NBFCs), which was formed in November through the merger of Shriram Capital with erstwhile listed units Shriram Transport Finance and Shriram City Union Finance.

The combined entity's profit surged to 17.77 billion rupees ($217.1 million) in the quarter ended Dec. 31, from 6.81 billion rupees a year before.

Its interest income grew 54% to 71.74 billion rupees in the October-December festive period, when big-ticket purchases are considered auspicious.

Net interest income, the difference between interest earned and paid, jumped 85.4%, while net interest margin on its assets under management (AUM) improved to 8.52% from 8.12% a year earlier.

Gross bad loans as a percentage of total loans -- a measure of asset quality -- eased to 6.29% from 8.40% a year before.

Shriram Finance's AUM rose to 1.77 trillion rupees as of end-December from 1.69 trillion as of end-September. ($1 = 81.8480 Indian rupees)

(Reporting by Nandan Mandayam in Bengaluru; Editing by Savio D'Souza)