Elevated foreign ownership a positive for Indian financial firms: Fitch

New Delhi: Fitch Ratings on Tuesday said significant ownership by foreign shareholders could be positive for the credit profiles of Indian financial institutions through long-term capital as well as removal of governance standards in some cases.

But foreign interest by itself is not a reliable signal of stronger credit fundamentals. Transactions that strengthen internal controls, risk management and leadership accountability may be more credit-related than those that are solely for financial gain, it said.

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Fitch said the recent increased interest from foreign investors reflects their growing confidence in India’s long-term growth prospects, financial sector regulation and oversight, and improving risk management.

Fitch believes investors will seek platforms with scalable distribution and local expertise. “Buyers with experience in developed markets can bring improvements in risk controls and board oversight,” he said, adding that the presence of reputable strategic shareholders could potentially mitigate the cost of capital.

These factors can contribute to strengthening the independent credit profile of financial institutions.
Also Read: Fitch raises India FY26 GDP growth forecast to 7.5%, driven by strong domestic demand“Significant ownership by foreign shareholders could be positive for the credit profiles of Indian financial institutions through long-term capital and funding flexibility, expansion of business franchises and, in some cases, removal of governance standards,” Fitch said in a statement. he said.

Bain Capital’s partial acquisition of Manappuram Finance in 2026 gives it joint control and the right to appoint two board members and key management personnel who can support Manappuram’s management, governance and business profile. However, Fitch said any impact on the credit profile would take time to materialize and would be subject to enforcement risk.

Fitch believes foreign shareholders have more room to gain control of non-bank financial institutions (NBFIs) than banks, as regulations allow full foreign ownership of NBFIs. For example, Sumitomo Mitsui Financial Group acquired 100 percent of Fullerton India Credit Company (now SMFG India Credit), resulting in sales and financing synergies as well as increased board and management representation.