Shriram Finance Rules Out Banking Licence Plans

Non-banking finance company Shriram Finance on Monday, December 22, clarified that it has no plans to apply for a banking licence. 

The statement followed speculation triggered by Kotak Mahindra Bank founder Uday Kotak, who questioned on X whether the company might consider becoming a bank after Japan’s MUFG Bank completed its investment in the firm.

Management Stance Remains Unchanged

Speaking at a press conference on the Shriram Finance–MUFG partnership, Executive Vice Chairman Umesh Revankar said the idea of converting into a bank is not under discussion. According to a Moneycontrol report, Revankar stated that management prefers to continue operating as an NBFC, citing India’s fast-growing economy and the vast opportunities available in retail lending.

"Getting a banking license is not under discussion at all. We prefer to remain where we are. Since India is growing very fast, it gives us a large opportunity to do retail lending, and there is enough scope to expand with whatever we have built," he stated as per a Moneycontrol report. 

He added that the company does not expect any structural changes in its business model following MUFG’s entry. Revankar also highlighted that operating as an NBFC allows greater flexibility and product customisation, which he sees as a key advantage in serving diverse borrower segments.

Advantages of the NBFC Model

Revankar emphasised that the NBFC structure offers sufficient scope for expansion without the regulatory complexities associated with banking licences. He noted that Shriram Finance believes it can continue scaling up profitably within the existing framework, especially as demand for credit rises across semi-urban and rural India.

Shriram Group Retains Control

Shriram Group will continue to exercise control over the board and management of Shriram Finance after MUFG’s investment. Managing Director and CEO Parag Sharma confirmed that MUFG will be classified as a minority public shareholder.

MUFG, through its senior management, has said it is comfortable with a 20% holding and will have the right to appoint two nominee directors. Board and management control will remain firmly with the Shriram Group.

Shareholding Changes Post Investment

Before the transaction, promoters and the promoter group held 25.3% of Shriram Finance, while public shareholders owned 74.7%. After MUFG’s investment, the Japanese lender will hold 20%, promoters will own 20.3%, and other public shareholders will hold 59.7%, reflecting proportional dilution.

Details of the MUFG Deal

MUFG’s $4.4 billion investment, equivalent to ₹39,618 crore, marks the largest cross-border investment in India’s financial sector. The investment will be made through a preferential issue of equity shares and is subject to shareholder and regulatory approvals.

Shriram Finance operates over 3,000 branches nationwide. The company reported total income of ₹41,859.47 crore and net profit of ₹9,761 crore in FY25, with assets under management of about ₹2.81 trillion as of September.

Shriram Finance Share Price Performance

On December 23, 2025, Shriram Finance share price (NSE: SRIRAMFIN) opened at ₹938.70, up from its previous close of ₹934.85. At 12:51 PM, the share price of Shriram Finance was trading at ₹953.65, up by 2.01% on the NSE.

Read More: RBI Imposes ₹61.95 Lakh Penalty on Kotak Mahindra!

Conclusion

Despite securing a landmark foreign investment, Shriram Finance has made it clear that it intends to stay the course as an NBFC. Management believes the current structure offers ample growth opportunities, flexibility, and scalability, making a banking licence unnecessary in the foreseeable future.

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