RBI’s prior approval not needed for Japan’s MUFG to acquire 20% stake in Shriram Finance
The Reserve Bank of India (RBI) has confirmed that Japan’s Mitsubishi UFJ Financial Group (MUFG) does not require prior regulatory clearance to participate in the Shriram Finance preferred issue, the company said in a bourse filing on Friday (Feb 13).
In December last year, Shriram Finance announced the sale of a 20% stake to MUFG; ₹39,618 crore, subject to approvals from shareholders and regulators. The company later stated that the proposed transaction would be the largest ever foreign direct investment (FDI) in the Indian financial sector.
“We are informed by the Investor that the Reserve Bank of India (RBI) has confirmed that the Investor is not required to seek prior approval from the RBI for the Proposed Transaction,” the filing published by Shriram Finance said.
About the Shriram-MUFG agreement
MUFG Bank’s investment in Shriram Finance is a strategic equity stake rather than a passive financial interest. Shriram Finance stated that through the proposed transaction, it aims to increase balance sheet flexibility at a time when scale, liquidity and risk management are becoming increasingly important in the Non-Banking Financial Company (NBFC) sector.
Meanwhile, Shriram Finance said in the case of MUFG, the transaction will provide access to one of India’s most comprehensive retail and MSME lending franchises built over decades in semi-urban and rural markets.
The $4.4 billion transaction received approval from credit rating agencies such as Care Ratings, ICRA and Moody’s Ratings, putting the NBFC in an advantageous position for low-cost borrowing.
Concerns expressed by proxy advisors
According to Mint’s report dated January 13, 2026, despite all the benefits highlighted by Shriram Finance, two leading proxy advisors have expressed concerns.
The NBFC is seeking shareholders’ approval for three resolutions, which include the issuance of shares worth 47.1 crore. ₹39,618 crore to MUFG through preferential private placement; Granting certain control rights to MUFG Bank; and a one-time, non-recurring payment of $200 million from MUFG to promoter Shriram Ownership Trust for non-competition and unsolicited covenants.
The decisions received the approval of the shareholders at the extraordinary general assembly meeting held on January 14.
Governance research firm Stakeholder Empowerment Services (SES) opposed all three proposals, while Institutional Investor Advisory Services opposed only the third. InGovern Research Services supported all decisions to approve the agreement.
What’s next?
Post the RBI’s approval, further approvals on the proposed transaction are pending and the company will provide further updates once these approvals are received, the filing said.
