Japan banks intensify India focus as MUFG nears Shriram Finance deal

Japan’s biggest banks are accelerating their push into India, with Mitsubishi UFJ Financial Group Inc. moving closer to a minority investment in Shriram Finance Ltd, as per a Bloomberg exclusive.

The potential transaction reflects rising foreign interest in India’s fast-growing credit market, particularly among lenders looking to tap demand beyond traditional corporate banking.

As competition sharpens, Japan’s financial groups are increasingly positioning themselves within India’s non-bank and retail-focused finance ecosystem, where loan growth has remained resilient across economic cycles.

Experts said MUFG is in advanced talks to acquire a minority stake in Shriram Finance, marking its latest step to expand in the world’s most populous country.

The discussions highlight how overseas banks are reassessing India as a long-term growth market, supported by vehicle demand, small business lending, and broader consumption trends.

MUFG may invest more than ¥500 billion, or about $3.2 billion, to buy a stake of around 20% in Shriram Finance.

An agreement could be reached as soon as this week, although the final price and stake size remain subject to change.

Deal discussions progress

While talks are said to be well advanced, negotiations are ongoing and could still face delays or fall apart.

Market reaction has been closely watched. Shares of Shriram Finance rose as much as 2.7% before paring some of those gains following reports of the potential deal.

The stock has climbed almost 50% this year, giving the Mumbai-based financial services firm a market value of about $18 billion.

Shriram’s business footprint

Shriram Finance operates across both urban and rural India, with lending focused on commercial vehicles, tractors, and passenger cars.

These segments are closely tied to transport, logistics, agriculture, and mobility demand across the country.

The company also provides credit to small and medium-sized enterprises, a core pillar of India’s economy and employment base.

Its diversified loan book and reach beyond major cities have helped position Shriram as a key player in non-bank lending, at a time when foreign institutions are increasingly looking for local partners with established distribution networks and customer access.

Japan banks expand India exposure

MUFG’s move comes as Japan’s largest banks ramp up investments in Indian financial institutions, betting on sustained economic growth and rising credit penetration.

Earlier this year, Sumitomo Mitsui Financial Group Inc. became the largest shareholder of Yes Bank Ltd. in a landmark transaction.

Since that deal, Sumitomo Mitsui has been working to expand its presence in India by increasing lending activity and adding staff, having deployed almost $5 billion in the country.

The strategy reflects a broader shift among Japanese lenders toward deeper, long-term involvement in India’s financial system rather than limited corporate banking operations.

Together, these developments underline how India is emerging as a central focus for Japan’s banking giants, as they seek growth opportunities outside mature domestic markets.

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