Shriram Finance confirmed it will not apply for a banking license after MUFG’s $4.4 billion investment for a 20% stake. The company prefers to remain an NBFC, focusing on retail lending opportunities without structural changes in management.
Non-banking finance company (NBFC) Shriram Finance on Monday, December 22, said that the company has no plans to apply for a banking license. The clarification came after Kotak Mahindra Bank founder Uday Kotak asked on X (formerly Twitter) whether Shriram Finance would soon seek to become a bank, following Japan’s MUFG Bank completing its $4.4 billion investment for a 20% stake in the Chennai-headquartered business.
Speaking at a press conference on the Shriram Finance-MUFG partnership today, Umesh Revankar, Executive Vice Chairman of Shriram Finance, said that the company becoming a bank is not something that the management sees happening right now.
“Getting a banking license is not under discussion at all. We prefer to remain where we are. Since India is growing very fast, it gives us a large opportunity to do retail lending, and there is enough scope to expand with whatever we have built,” he said as per a Moneycontrol report, adding that no change is expected structurally in the way they manage business after the said stake acquisition by MUFG is completed.
Revankar believes there is enough scope and opportunity for Shriram Finance to remain as an NBFC and keep growing. “Being an NBFC gives you the advantage of customisation. It is better to remain in this particular structure for as long as possible,” he added.
Shriram Group retains control
Shriram Group will continue to hold control over the board and management of Shriram Finance Ltd following its deal with MUFG.
MUFG will be classified as a minority public shareholder, with board and management control remaining with the Shriram Group, said Parag Sharma, managing director & CEO of Shriram Finance.
“We are happy with a 20% stake, under which MUFG will be classified as a minority public shareholder with the right to appoint two nominee directors,” said Yasushi Itagaki, senior managing corporate executive and Group COO-I, MUFG.
The fund infusion for a 20% stake in Shriram Finance will result in proportional dilution among public shareholders and promoters. Before the transaction, promoters and the promoter group held 25.3%, while other public shareholders held 74.7% in Shriram Finance. After MUFG’s investment, the Japanese company will hold 20%, other public shareholders 59.7%, and promoters 20.3%.
Shriram-MUFG’s ₹39,618 crore deal
The company on Friday said that MUFG will buy a 20% stake in Shriram Finance for $4.4 billion ( ₹39,618 crore). This marks the largest cross-border investment in India’s financial sector and adds to the growing list of Japanese investments in domestic lenders.
The investment by MUFG will be made through a preferential issuance of equity shares and is subject to shareholder approval, regulatory clearances, and customary closing conditions, according to a company statement.
Mint had previously reported that MUFG was in talks to invest $4.5–5 billion for a 20% stake, valuing Shriram Finance at $22–25 billion. Earlier this year, Mizuho made a majority investment in Avendus, and Sumitomo Mitsui Banking Corp. acquired a stake in Yes Bank.
Shriram Finance operates more than 3,000 branches nationwide. It reported total income of ₹41,859.47 crore and a net profit of ₹9,761 crore in FY25, managing assets of about ₹2.81 trillion as of September, according to company filings.
Disclaimer: Moneywealth research provides stock market news for informational purposes only and should not be construed as investment advice. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions.
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