India’s financial services sector is once again in the news after it was announced earlier today that Japan’s Mitsubishi UFJ Financial Group (MUFG) will invest around Rs 40,000 crore or $4.5 billion for a 20% stake in Shriram Finance Limited. The deal is the largest-ever strategic investment by a foreign lender in India’s fast-growing non-banking financial company (NBFC) sector.
Industry experts have described this big deal as a good sign for the banking sector and the Indian economy. While giving an interview to a media house, former Vice Chairman and Chief Executive Officer (CEO) of Housing Development Finance Corporation (HDFC) Keki Mistry said that this deal further strengthens the confidence of foreign investors in the Indian markets.
Shriram-MUFG deal
According to Mistry, this deal boosts confidence in India and shows that foreign investors have confidence in the Indian market, as they are confident in the rule of law environment and the existing growth opportunities. HDFC’s experienced mechanic said that hence this is a good sign for India. The former HDFC CEO has no doubt that the Indian economy is in a very strong position. Mistry said that finance is the most important element or basis for continuously moving the economy forward.
According to him, India’s financial sector is very attractive for foreign investors, because the penetration of any financial service product in India is still less compared to the global level. Mistry said that for this reason there is a lot of potential for progress in the financial services sector. This is why Japanese banks are long-term investors. Looking at India from such a positive perspective.
What do foreign fund flows mean for India’s banking sector?
Mistry does not see any problem in India’s banking sector regarding foreign capital, because the Indian financial system is very strong and well regulated. He said that domestic investment itself is so big, so I have no worries about foreigners coming and investing more money in India.
Giving an example, Mistry explained that the MSCI index depends on how much money foreign investors can invest in a company. He said that in case of banks the limit of foreign stake is 74%. Theoretically, if it is increased from 74% to 100%, much more foreign money can come into India without impacting control or shareholders.
Also read- Country’s defense sector will be strengthened, Indian Army will buy 850 modern Kamikaze drones
Leave a Reply