Japanese banking giant Mitsubishi UFG Financial Group (MUFG) has infused an additional ₹2,798 crore ($334 million) in digital lending company DMI Finance Pvt. Ltd, a sign of growing investor interest from Asia’s second-largest economy.

“India is a large market where rapid economic growth is expected, wherein the accelerated development of digital financial services is also foreseen due to the spread of the internet and various policies promoting digitalization,” said MUFG in its statement. This strategic investment in a major player in India’s digital financial services industry aims to further capture growth in the area, it said.

MUFG valued DMI Finance at $3 billion, becoming the digital lender’s second-largest shareholder after DMI Limited, Mauritius.

The investment, made through its consolidated subsidiary MUFG Bank, takes the total money the Japanese group has ploughed into DMI Finance to ₹4,712 crores (approximately $565 million), adding to the $400 million injected last April.

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According to Chatterjee, DMI Finance plans to use the capital to expand its balance sheet. It aims to boost its lending to small and medium enterprises to 25% of total loans from the current 10% over the next 12-18 months. DMI Finance is also open to looking at acquisitions, he said.

“We are looking to increase our MSME portfolio as there is a structural need for greater credit to MSMEs. In consumer loans, our growth in FY2025 is slower than it was in FY2024, which is consistent with a period of retrenchment as we are past the peak for consumer credit in this cycle,” said Chatterjee. “This is a cyclical episode which is necessary as it helps to take the froth out of the market.”

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