Mitsubishi UFJ Financial Group Inc (MUFG) is in talks to acquire a roughly US$1.7 billion stake in HDFC Bank Ltd’s consumer lending unit to tap booming demand for personal finance loans in India, people familiar with the matter said.

Japan’s biggest lender is nearing the purchase of a 20% stake in HDB Financial Services Ltd, which offers personal, gold and auto loans, said the people, who asked not to be named because the information is private. 

Negotiations are in the final stages, terms may change and it’s possible that no agreement will be reached, they added. 

The move marks the latest in a string of acquisitions by Japan’s top banks in India, a market which is rapidly becoming a pillar of their growth plans after building out a presence in Asia’s other emerging economies. Rival Sumitomo Mitsui Financial Group Inc bought a majority stake in Fullerton India Credit Co for about US$2 billion in 2021, purchasing the remainder of the company last month.

A spokesperson for MUFG declined to comment. A representative for India’s HDFC Bank didn’t immediately respond to a request for comment.

India’s biggest lender, which owns a 95% stake in HDB Financial Services, has been seeking ways to sell part of its non-bank lending subsidiary for years. The firm was slated for a stock market debut about five years ago before ending the plan in favour of finding a strategic investor. More recently, the bank once again revived plans for an initial public offering of the unit, Economic Times wrote last month, citing people familiar with the development.  

Economic Times reported on the deal earlier on Friday.

  - Bloomberg