The presence of credible strategic shareholders can also support lender confidence and potentially lower funding costs for investee firms.

Fitch Ratings on Tuesday said rising foreign ownership in Indian financial institutions can bolster credit profiles by improving capital access, governance standards and business strength, but cautioned that such investments are not a standalone indicator of stronger fundamentals.

In a note, Fitch said transactions that enhance internal controls, risk management and leadership accountability are more credit-relevant than those driven purely by financial considerations. Growing interest from overseas investors reflects confidence in India’s long-term growth, regulatory oversight and improving risk governance, it added.

The agency said foreign investors are likely to target platforms with scalable distribution and strong local expertise, while bringing in global best practices in risk controls and board oversight. The presence of credible strategic shareholders can also support lender confidence and potentially lower funding costs for investee firms.

Recent deals

Citing recent deals, Fitch said Bain Capital’s partial acquisition of Manappuram Finance could strengthen the latter’s governance and management profile, although any credit impact will depend on execution and take time to materialise. Greater alignment with strong shareholders may also improve the likelihood of capital and liquidity support during stress, depending on factors such as stake size, strategic intent and board influence.

Fitch noted that non-bank financial institutions (NBFIs) offer greater scope for foreign control than banks, given regulations permit up to 100 per cent overseas ownership. It highlighted Sumitomo Mitsui Financial Group’s full acquisition of Fullerton India Credit as an example of deep integration and synergies. In contrast, foreign ownership in banks is typically capped at minority stakes, barring exceptional cases such as DBS Group Holdings’ acquisition of Lakshmi Vilas Bank in 2020.

Strategic minority investments can also yield operational benefits, Fitch said, pointing to Mitsubishi UFJ Financial Group’s stake in Shriram Finance. However, purely financial investments—such as Fairfax Financial Holdings’s holding in IIFL Finance—may offer limited integration benefits.

Fitch added that all such transactions remain subject to regulatory scrutiny, including assessment of investor track record and potential competitive impacts.

Published on April 21, 2026