MUFG deal: Shriram Finance likely to benefit from lower cost of funds

Shriram Finance Ltd (SFL) is expected to see a 15–30 basis points (bps) reduction in its cost of funds following MUFG Bank’s proposed investment of ₹39,618 crore (about $4.4 billion) for a 20 per cent stake in the lender, analysts said.

 

They added that credit spreads between its bonds and bank borrowings could also narrow.

 

Some experts also said that with a significantly strengthened capital base, the lender may consider a move towards becoming a universal bank.

 

“Domestically, it may see a 15-25 bps moderation in cost of funds as it (Shriram Finance) is likely to replace high cost commercial