Shriram Finance on Monday said Japan’s Mitsubishi UFJ Financial Group’s (MUFG) proposed acquisition of a 20 per cent stake in the non-bank lender for ₹39,618 crore (about $4.4 billion) will significantly strengthen its balance sheet and support growth across existing businesses.
The transaction is expected to lift the company’s capital adequacy ratio to around 31 per cent from 20.68 per cent at the end of September 2025.
The improvement in capital levels is also expected to pave the way for rating upgrades, translating into cheaper borrowing costs over time. A potential upgrade from AA+ to AAA could reduce the cost of funds by 50–75 basis points as liabilities mature and incremental borrowings come at lower rates.
“It happens over a period of three to four years as and when the liability is matured and the incremental borrowing is at a cheaper cost. The benefit will be seen by the company,” Shriram Finance MD and CEO Parag Sharma said.
No banking foray
Asked if the company has any plans to enter into the banking space, Umesh Revankar, executive vice-chairman of Shriram Finance, said, “There is no such plan at the moment as we have enough scope and opportunity to grow in the existing line of business itself.”
He said being an NBFC has the advantage of specialisation and customisation than a bank.
Shriram Finance offers a wide range of products, including commercial vehicle loans, MSME loans, tractors & farm equipment, gold loans, personal loans and working capital loans across its 3,225 branches. Its asset under management across businesses was ₹2.81 lakh crore as of Q2FY26.
MUFG, meanwhile, indicated it does not plan to raise its stake further at this stage. “We are happy with our status as a significant minority shareholder in Shriram Finance,” said Yasushi Itagaki, senior managing corporate executive, group COO and group head, global commercial banking business group, MUFG. “Our focus is on how best to help Shriram accelerate its growth,” he added.
Branch expansion
Asked about expansion plans, Revankar said some of the funds would go towards opening new branches and converting existing rural satellite offices to a branch. Over the next two years, “we will open 100 new branches per annum, which will generate 3,000 to 5,000 fresh employment,” he said.
