As Japan’s largest bank, MUFG has been investing in India’s fintech landscape, backing startups such as Jupiter, M2P, Lentra and Dhan through its corporate venture arm, MUFG Innovation Partners (MUIP). Now, the Tokyo-based investor is looking to widen its footprint, betting on the country’s digital financial growth story as well as AI-led innovations. Nobutake Suzuki, CEO, MUIP, discusses with Ayanti Bera the firm’s investment strategy in the country. Excerpts:
What drives your investment thesis in India?
It’s largely based on the growth potential of the country. India’s population of over 1.4 billion creates a large pyramid, from affluent consumers to those at the bottom. Many underprivileged people remain underserved by financial institutions, and fintechs are filling that gap. We also see opportunities to help Indian fintechs expand globally by connecting them with our bank entities in other regions like Indonesia, the Philippines, Vietnam, and Thailand, where MUFG owns stakes ranging from 20% to 94%.
Your portfolio spans across fintech segments, from neobanking to discount brokerages. Do you have a preferred segment within fintech?
We are cross-segment investors. For example, Jupiter is a digital bank, and we usually avoid investing in digital banks elsewhere since they compete with incumbent banks like MUFG. But Jupiter is an exception – we believe in its long-term growth in India. If they expand globally someday, we’d like to support that expansion through MUFG’s network. For example, with Lentra, which provides loan origination systems for Indian banks, after investing, we connected them with our bank entities in ASEAN countries to help with their global expansion.
What about digital lending? That’s a major space in India.
Absolutely. MUFG has also invested in DMI Finance, which provides credit using alternative underwriting models, mainly for smartphone purchases in partnership with companies like Samsung. If a borrower defaults, the device usage can be remotely restricted. So, yes, digital lending is a major focus area too.
Is there a specific investment target or allocation for India?
Our current fund is the MUIP Third Fund, with a total commitment of roughly $140 million. We plan to invest 15-20% of that in Indian companies. Separately, MUFG Bank has the Ganesha Fund, a $300-million balance sheet investment pool for Indian startups. That’s distinct from our CVC fund.
How does India’s fintech ecosystem compare with other emerging markets you invest in?
In terms of regulation, most emerging markets face similar challenges, that is, rapid growth often leads regulators to change rules abruptly, sometimes without consulting industry players. That uncertainty can be difficult. But India stands out in innovation. It has a huge pool of engineering talent, which gives it an edge. The quality of technology here is remarkable – just look at India’s success with Chandrayaan 3. India doesn’t just have the quantity of talent, but the quality too.
Do you have any upcoming investments planned in India?
We continue to invest actively, including in AI-related companies. Compared to markets like the US or Japan, where startup activity is slowing, India remains resilient and is now the third-largest startup ecosystem after the US and the UK. That resilience attracts global investors.
When you say AI-related companies, are you referring to those in fintech only?
AI in fintech as well as AI-native companies in general. AI is becoming increasingly important for MUFG, especially since we operate large global service centres like MUFG Global Services in Bengaluru, which employs several thousand people. We’re also exploring ways to use AI within those operations.
What kind of business models in AI are you excited about now?
I find AI companies focused on non-English or Indian languages exciting. The global AI landscape is still highly English-centric, so developing vernacular foundation models has strong potential not just for India, but also for countries like Japan or other Asian markets.