Uday Kotak flags strategic question as Japan's MUFG makes ₹39,620-cr bet on Shriram Finance

Uday Kotak, Founder and Director of Kotak Mahindra Bank, has spotlighted the strategic significance of Japan’s Mitsubishi UFJ Financial Group (MUFG) picking up a minority stake in Shriram Finance, calling it a strong signal of foreign confidence in India’s financial sector.

Commenting on the deal in a post on X (formerly Twitter), Kotak said he was “happy to see big ticket foreign investment in Shriram Finance by Mitsubishi UFJ, a reputed global bank and financial institution,” while also posing a key question on the company’s future direction — whether Shriram should continue as a high-growth non-banking financial company (NBFC) or eventually apply for a banking licence. 

Kotak’s remarks came after MUFG announced the acquisition of a 20% stake in Shriram Finance Ltd. for ₹39,620 crore, marking one of the largest foreign investments in India’s non-banking finance space this year. The Japanese financial major will acquire shares at ₹840.93 apiece, representing a discount of around 3% to the stock’s closing price on December 18. 

Subject to approvals from relevant regulatory authorities, the transaction will result in Shriram Finance becoming an equity-method affiliate of both MUFG and MUFG Bank. As part of the deal, MUFG will have the right to appoint two nominee directors to the board of Shriram Finance, giving it a significant strategic presence in the company. 

In addition to the equity investment, MUFG Bank has signed a memorandum of understanding with Shriram Finance to establish a strategic partnership aimed at accelerating the lender’s growth through closer collaboration. The agreement also includes non-compete and non-solicitation obligations on the Shriram Ownership Trust in relation to the company’s lending and credit businesses. MUFG will pay a one-time, non-recurring fee of $200 million to the Trust as part of this arrangement. 

The Shriram Finance deal is the latest in a series of large Japanese investments in India’s financial services sector. Earlier, MUFG’s domestic rival Sumitomo Mitsui Financial Group (SMFG) acquired nearly a 25% stake in Yes Bank for close to $2 billion, underlining Japan Inc.’s growing interest in Indian financial assets. 

With MUFG’s investment, India’s financial sector has seen deals worth over $11 billion in 2025 so far, spanning both banks and non-bank lenders. Institutions such as Yes Bank, RBL Bank, Sammaan Capital and Federal Bank have all attracted sizeable investments this year, reflecting strong investor appetite for India’s expanding credit market.

Shares of Shriram Finance surged on December 19, scripting history as the stock surged to an all-time high following a mega-investment announcement. On Friday, shares of Shriram Finance gained 4.53 per cent to touch an all-time high of Rs 908.55 on the BSE, surpassing its previous close of Rs 869.20 apiece. At last check, the counter was trading 4.34 per cent higher at Rs 906.95.