Will Shriram Finance apply to become a bank? Here's what top management said after MUFG deal

Shriram Finance MUFG press conference

Shriram Finance's management clarified on December 22 that it has no plans to apply for a banking license right now, after Japan's Mitsubishi UFJ Financial Group acquired a minority stake of 20 percent in the NBFC for Rs 39,600 crore.

This comes days after Kotak Mahindra Bank founder Uday Kotak asked whether the company will soon apply to become a bank after the stake acquisition by the foreign company.

What Uday Kotak had said:

After Shriram Finance announced its deal with MUFG, Uday Kotak took to X (formerly Twitter) to share his thoughts. “Happy to see big ticket foreign investment in Shriram Finance by Mitsubishi UFJ, a reputed global bank and financial institution,” he wrote.

He further said, “Will Shriram continue as NBFC which has huge potential without regulatory constraints of a banking company, or apply to become a bank in due course?”

Happy to see big ticket foreign investment in Shriram Finance by Mitsubishi UFJ, a reputed global bank and financial institution. Will Shriram continue as NBFC which has huge potential without regulatory constraints of a banking company, or apply to become a bank in due course?

— Uday Kotak (@udaykotak) December 19, 2025

Here's what Shriram Finance's top management said:

Speaking at a press conference on Shriram Finance-MUFG partnership on December 22, 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, 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.

MUFG won't increase stake in Shriram Finance above 20%:

Shriram Finance MD & CEO Parag Sharma meanwhile said that the company expects retail credit to go up substantially because of its partnership with Japan’s MUFG. It also expects to expand its product base and distribution, while keeping is focus on vehicle finance.

Yasushi Itagaki, senior managing corporate executive and Group COO-I at MUFG, said that the Japanese financial company is happy with its status as a “significant minority stakeholder” in Shriram Finance. “Right now, we have no intention of going above 20 percent,” he added.

The executive from the Japanese conglomerate added that it has "no interest in investing in any other arms of Shriram Group". "We respect local branding and names, so Shriram Finance's name will remain," he further said.

Shriram Finance-MUFG deal:

Shriram Finance on December 19 announced that MUFG Bank will acquire 20 percent stake in the NBFC for Rs 39,600 crore ($4.4 billion) through preferential allotment of equity shares. This marks the largest FDI in India's financial sector.

The floor price for the preferential issue was set at Rs 840.83 per share, with MUFG set to acquire 47.11 crore equity shares.

Shriram, India’s second-biggest non-bank lender after Bajaj Finance Ltd., operates businesses across urban and rural areas, focusing on loans for commercial vehicles, tractors and passenger cars.

The shares of the company jumped more than 5 percent on December 22 to trade at a 52-week high of Rs 949.8 apiece.

Brokerages expect the deal to strengthen Shriram Finance’s balance sheet, bolster growth prospects and potentially pave the way for a credit rating upgrade. They have raised target prices and remain broadly positive on the long-term outlook, despite near-term earnings dilution from the expanded equity base.

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