Uday Kotak, Asia's richest banker, weighed in on the MUFG-Shriram Finance Ltd. deal, wondering if the next step for the NBFC is apply for a bank license.
Japan's MUFG on Friday announced an investment of nearly Rs 40,000 crore to acquire 20% stake in Shriram Finance. The deal marks the largest strategic investment by a foreign lender in India's non-banking financial sector.
"Happy to see big ticket foreign investment in Shriram Finance by Mitsubishi UFJ, a reputed global bank and financial institution," Kotak posted on social media platform X, where he is followed by 11 lakh users.
"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?" the billionaire banker said.
Shriram Finance, the flagship company of the Shriram Group, is the country's second largest retail NBFC in terms of assets under management. It is a blue-chip stock on both NSE and BSE.
To be sure, the Reserve Bank of India has certain parameters for NBFCs graduating to become banks.
Uday Kotak's own journey began as a founder of an NBFC. In 1985, he started Kotak Capital Management Finance Ltd. with a loan of Rs 30 lakh from family and friends. The following year, auto tycoon Anand Mahindra and his father Harish invested Rs 1 lakh in the company which was subsequently renamed Kotak Mahindra Finance.
The company expanded into car financing, investment banking services, insurance and mutual fund business in the 1990s and early 2000s.
In February 2003, Kotak Mahindra Finance received a banking licence from the RBI, becoming India's first non-banking finance company to be converted into a bank.
The company was then renamed Kotak Mahindra Bank Ltd. and was then majorly owned by Uday Kotak.
The private lender's total market capitalisation stands at Rs 4.3 lakh crore and the group has more than $85 billion in assets. The Mumbai-based company has over 2,150 branches.
Kotak himself has a net worth of $15 billion, according to Bloomberg.
RECOMMENDED FOR YOU
Japan's MUFG Group To Invest Rs 40,000 Crore For 20% Stake In Shriram Finance
IDBI Bank Merger With Kotak Mahindra May Take 2–3 Years To See Results: Hercules Advisors' Founder
Kotak Mahindra Bank Announces 1:5 Stock Split — Check Details
Kotak Mahindra Bank Turns 40: Uday Kotak Recalls Launching It With Rs 30 Lakh In A 300 Sq Ft Office
POPULAR