Mitsubishi UFJ Financial Group Invests in India’s Shriram Finance
Japan’s leading financial institution, Mitsubishi UFJ Financial Group (MUFG), recently announced a significant investment in India’s non-banking financial company, Shriram Finance. This strategic move marks a collaboration between MUFG and Shriram Finance, intending to accelerate the latter’s growth and expand its reach in India’s rural and semi-urban regions.
The investment agreement, valued at approximately Rs396.2bn (around $4.3bn), was signed by MUFG Bank – a consolidated subsidiary of MUFG, and Shriram Finance. This milestone deal also included the major shareholders of Shriram Finance – Shriram Ownership Trust and Shriram Capital Private Limited.
Details of the Agreement
The terms of the agreement stipulate that MUFG Bank will subscribe to a preferential allotment of 20% equity shares in Shriram Finance, making it an equity method affiliate of Mitsubishi UFJ Financial Group and MUFG Bank. The completion of this investment is subject to regulatory approval.
Under the agreement, MUFG plans to appoint two directors to Shriram Finance’s board, further strengthening the partnership. In addition, MUFG Bank and Shriram Finance signed a memorandum of understanding towards a strategic collaboration aimed at facilitating Shriram Finance’s growth through various partnerships.
The Role of Shriram Finance
Established in 1979, Shriram Finance has made significant strides in India’s financial sector. It is recognised as the second-largest retail non-banking financial company (NBFC) in India based on loan balance. The company operates a widespread network of nearly 3,200 branches, primarily in rural and semi-urban regions. Shriram Finance primarily focuses on commercial and passenger vehicle loans, with a strong presence in the used vehicle loan segment.
MUFG’s Presence in India
Mitsubishi UFJ Financial Group’s presence in India dates back to 1894 when its predecessor, Yokohama Specie Bank, opened a branch in Mumbai. Today, MUFG Bank operates in six locations across India, offering a range of banking services to corporate clients such as loans, deposits, and foreign exchange.
By investing in Shriram Finance, MUFG aims to assist in driving expansion in new commercial vehicles, micro, small, and medium enterprises (MSMEs) segments. This strategic move also aims to improve funding capacity and profitability through enhanced creditworthiness.
The Anticipated Impact of the Collaboration
Through this alliance, MUFG and Shriram Finance aim to combine MUFG’s client network and services with Shriram Finance’s regional reach and established customer base. This collaboration is expected to support the development of India’s road transport infrastructure and logistics sector, contributing significantly to financial inclusion progress.
In a similar vein, in May 2025, MUFG and MUFG Bank signed a multi-year partnership with Sakana AI to integrate AI into the bank’s operations, symbolising MUFG’s commitment to innovation and growth.
This partnership with Shriram Finance allows MUFG to further solidify its presence in India and contribute to the growth of the country’s financial sector.
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