MUFG’s Shriram Finance Stake Signals a New Phase in India–Japan Financial Partnership

MUFG CEO Hironori Kamezawa’s meeting with Prime Minister Narendra Modi in New Delhi highlights Japan’s deepening financial partnership with India, as MUFG acquires a 20% stake in Shriram Finance to support MSMEs and Viksit Bharat.

PM Modi and MUFG Group President Kamezawa reaffirm economic ties and mutual growth in India

Hironori Kamezawa, President and CEO of Mitsubishi UFJ Financial Group (MUFG), called on Narendra Modi in New Delhi, the meeting went far beyond diplomatic courtesy. It marked a decisive moment in India–Japan economic ties, underscored by MUFG’s announcement of a 20 per cent equity stake in Shriram Finance, one of India’s largest non-banking financial companies (NBFCs).

Held alongside the investment announcement, the interaction highlighted how Japanese capital is increasingly aligning with India’s long-term growth story—particularly in sectors central to Prime Minister Modi’s vision of Viksit Bharat, or a developed India.

A Strategic Investment with Developmental Weight

MUFG Bank, a consolidated subsidiary of MUFG, has entered into an agreement to acquire a 20 per cent stake in Shriram Finance through a preferential allotment. The total investment is expected to be approximately INR 396.2 billion, subject to regulatory approvals. Upon completion, Shriram Finance will become an equity-method affiliate of MUFG and MUFG Bank, with the Japanese group planning to appoint two directors to the NBFC’s board.

Beyond balance sheets, the investment represents a strategic bet on MSME financing in India, financial inclusion, and domestic demand growth. Shriram Finance is the second-largest retail NBFC in India by loan book size, with a strong presence in rural and semi-urban markets and a nationwide network of around 3,200 branches. Its focus on commercial and passenger vehicle loans places it at the heart of India’s transport, logistics, and small-business economy.

PM Modi’s Endorsement and the Viksit Bharat Lens

Prime Minister Modi welcomed MUFG’s impending investment as a meaningful contribution to India’s development roadmap. He acknowledged MUFG’s longstanding support for India’s financial sector development and encouraged deeper collaboration—ranging from technology exchange and economic missions to the economic empowerment of women.

For the Indian government, large-scale foreign investment in the NBFC sector carries particular significance. NBFCs play a critical role in reaching borrowers beyond the formal banking system, especially micro, small, and medium enterprises (MSMEs) that form the backbone of employment and regional growth.

Trust as the Foundation of Strategy

Kamezawa underscored that trust between India and Japan lies at the core of MUFG’s long-term strategy in the country. “India remains at the core of MUFG’s ambitions in Asia, and we are committed to further investing in this partnership between our countries,” he said.

That commitment is not new. MUFG’s roots in India date back to 1894, when the predecessor of today’s MUFG Bank opened a branch in Bombay (now Mumbai). Today, MUFG operates across six locations in India, offering comprehensive banking services to corporate clients, including deposits, lending, and foreign exchange.

Building a Business Foundation in India’s Growth Sectors

MUFG views India as one of its most important global markets, driven by demographics, rising incomes, and digital adoption. The Shriram Finance investment is designed to help MUFG establish a strong business foundation in India’s retail and MSME markets, capturing the country’s expanding domestic demand.

Through the strategic alliance with Shriram Finance, MUFG aims to combine its global banking expertise and capital strength with Shriram’s deep local knowledge and customer relationships. The partnership is expected to accelerate growth in segments such as new commercial vehicles, MSME lending, and logistics, while enhancing funding capacity and creditworthiness.

The collaboration also aligns with India’s policy focus on financial inclusion, a priority area where NBFCs play a complementary role to banks by serving first-time and underserved borrowers.

A Broader Pattern of Japanese Investment in India

The deal fits into a wider pattern of Japanese investment in India’s financial ecosystem. In recent years, MUFG launched the MUFG Ganesha Fund, an India-focused fund supporting startups across sectors, and invested in DMI Finance, a digital NBFC, to strengthen its presence in retail and technology-driven lending.

Together, these moves reflect Japan’s growing confidence in India as a stable, scalable, and strategically important market—particularly at a time when global capital is seeking diversification and resilience.

Why This Deal Matters Beyond Finance

At a macro level, the MUFG–Shriram Finance partnership illustrates how India–Japan financial partnership is evolving from traditional banking relationships to deeper equity participation and long-term alignment. It also highlights how foreign capital can support India’s infrastructure, logistics, and MSME ecosystems without diluting domestic ownership or priorities.

For Japan, the investment strengthens its economic footprint in a country projected to become the world’s third-largest economy by 2030. For India, it reinforces global confidence in its regulatory framework, financial institutions, and growth trajectory.

A Signal of Long-Term Alignment

As geopolitical uncertainty reshapes global investment flows, partnerships built on trust, scale, and shared development goals are gaining renewed importance. MUFG’s investment in Shriram Finance—and Kamezawa’s engagement with Prime Minister Modi—signals precisely such an alignment.

It is a reminder that India–Japan economic ties are no longer just about bilateral trade or aid-driven cooperation. They are about shared stakes in growth, inclusion, and long-term value creation—principles that sit at the heart of both countries’ strategic visions.