Shriram Finance Clears Air On NBFC-To-Bank Transition Speculations After MUFG Deal
Executive Vice Chairman Revankar said that India's fast-paced growth gives the NBFC an opportunity to carry out retail lending and with enough scope to expand with whatever it has built so far.
Shriram Finance Ltd. has issued a clarification on whether or not it will transition to a bank after Japan's Mitsubishi UFJ Financial Group acquired a minority stake in the company and said that becoming a bank is not something that the company sees happening right now.
While speaking at a press conference on Shriram Finance-MUFG partnership, Umesh Revankar, Executive Vice Chairman of Shriram Finance, cleared the air around the possibility of the NBFC transitioning to a bank and said, "Getting a banking license is not under discussion at all. We prefer to remain where we are."
Revankar added that India's fast-paced growth gives the NBFC an opportunity to carry out retail lending and with enough scope to expand with whatever it has built so far.
The vice chairman highlighted that the structure of the company will remain largely unchanged after MUFG completes the minority acquisition.
"Being an NBFC gives you the advantage of customisation. It is better to remain in this particular structure for as long as possible," Revankar stated.
The clarifications comes days after Uday Kotak, the founder of Kotak Mahindra Bank asked whether or not Shriram Finance transition to a bank or remain an NBFC after the deal with MUFG.
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.
Not More Than 20% Stake For Japanese Financial Group
Yasushi Itagaki, senior managing corporate executive and Group COO-I at MUFG highlighted that they are happy being a minority stake holder in the company and have no plans of exceeding acquisition beyond 20%.
Parag Sharma, MD and CEO of Shriram Finance, said that the NBFC's retail credit is expected to go up considerably on account of the partnership, and also the company will also look into expanding its product base and distribution, while keeping is focus on vehicle finance.
