In a significant clarification, Shriram Finance, a leading non-banking finance company (NBFC), has firmly stated it has no intention of applying for a banking license. This announcement comes directly after a major $4.4 billion investment from Japan's MUFG Bank for a 20% stake in the Chennai-based lender.
Management Commits to NBFC Model
The statement was made by Umesh Revankar, Executive Vice Chairman of Shriram Finance, during a press conference addressing the landmark partnership with MUFG. Revankar explicitly dismissed any immediate plans for the company to transform into a bank. "Getting a banking license is not under discussion at all," he asserted, as reported by Moneycontrol.
He emphasized the company's strategic preference to continue operating as an NBFC, citing the rapid growth of the Indian economy and the vast opportunity in retail lending. "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," Revankar explained. He highlighted the advantage of customization that the NBFC structure offers, suggesting it is beneficial to maintain this model for the foreseeable future.
Shriram Group Retains Firm Control
Despite the massive capital infusion, the Shriram Group will continue to hold control over the board and management of Shriram Finance Ltd. Parag Sharma, Managing Director & CEO of Shriram Finance, confirmed that MUFG will be classified as a minority public shareholder, with all board and management control staying with the founding group.
This sentiment was echoed by MUFG. Yasushi Itagaki, Senior Managing Corporate Executive and Group COO at MUFG, stated, "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." The deal, valued at ₹39,618 crore ($4.4 billion), represents the largest cross-border investment in India's financial sector and will result in a proportional dilution of shareholding.
Shareholding Structure Post-Investment
The stake acquisition will adjust the company's ownership as follows:
- MUFG Bank: 20%
- Other Public Shareholders: 59.7% (reduced from 74.7%)
- Promoters & Promoter Group: 20.3% (reduced from 25.3%)
The investment is being made through a preferential issuance of equity shares and is pending shareholder and regulatory approvals.
A Landmark Deal for Indian Finance
The transaction underscores the strong international interest in India's thriving financial services landscape. Shriram Finance, with its extensive network of over 3,000 branches nationwide and managed assets of about ₹2.81 trillion as of September, reported a total income of ₹41,859.47 crore and a net profit of ₹9,761 crore in FY25.
Revankar assured stakeholders that no structural changes in business management are expected following the completion of MUFG's stake acquisition. The company's leadership remains focused on leveraging its established NBFC framework to capitalize on India's growth story, rather than navigating the different regulatory and operational landscape of a bank.
