CARE Upgrade Hints Shriram Finance’s Quiet Power Shift

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CARE Ratings’ upgrade to AAA for Shriram Finance underscores balance-sheet resilience, just as the NBFC deepens its strategic alignment with Abu Dhabi’s Mubadala-backed MUGF

By S JHA

Mumbai, December 30, 2025 — Shriram Finance Ltd’s latest credit rating upgrade signals a key moment for India’s non-banking financial sector—and a marker of how global capital confidence is reshaping domestic lending powerhouses.

In a filing to stock exchanges on Monday, Shriram Finance informed investors that CARE Ratings has upgraded the credit ratings on the company’s Non-Convertible Debentures (NCDs) and Subordinated Debt to “CARE AAA; Stable” from “CARE AA+; Stable.” At the same time, CARE reaffirmed the “CARE A1+” rating on Shriram Finance’s Commercial Paper, the highest short-term rating.

In the risk-sensitive world of NBFC funding, an AAA rating is not cosmetic. It materially lowers borrowing costs. The development also widens access to long-term capital. Additionally, the upgrade strengthens institutional trust—particularly at a time when credit markets are punishing leverage and rewarding prudence.

What gives this upgrade added weight is its timing. Over the past two years, Shriram Finance has emerged as a preferred Indian partner for long-duration global capital, most notably through its relationship with MUGF, a subsidiary of Abu Dhabi-based Mubadala Investment Company.

The MUGF–Shriram partnership, which includes equity participation and strategic capital support, has played a critical role in strengthening Shriram Finance’s capital adequacy, liquidity buffers, and governance benchmarks—factors that rating agencies increasingly prioritise over raw growth numbers.

CARE’s upgrade implicitly validates that transformation. Shriram Finance’s diversified loan book—spanning commercial vehicles, MSMEs, personal loans, and rural finance—has historically been seen as high-yield but high-risk. The AAA rating marks a clear inflection point: the market now sees the franchise as systemically important, well-capitalised, and globally bankable.

(This article makes no recommendation for buy or sell of shares of any company)