Japan’s SMBC gets RBI nod to pick up 25% stake in Yes Bank

Mumbai: The Reserve Bank of India (RBI) has approved Sumitomo Mitsui Banking Corporation (SMBC) to acquire up to 24.99% in Yes Bank’s paid-up share capital and voting rights, a move that would make the Japanese lender the largest shareholder, ahead of SBI.

The approval, issued on Aug 22 and valid for one year, also clarified that SMBC will not be classified as a promoter. The transaction remains subject to clearance from the Competition Commission of India (CCI) and other customary conditions.The deal involves SMBC purchasing a 20% stake, including 13.19% from State Bank of India and 6.81% from a group of private banks. The investment, estimated at about $1.6 billion, would be the largest foreign investment in an Indian bank.

SBI will retain around 10.8% after the transaction, which is expected to conclude by Sept 2025. SMBC will also gain the right to nominate two directors to Yes Bank’s board.In July, India Ratings and Research (Ind-Ra) upgraded Yes Bank’s long-term issuer rating to ‘IND AA-’ from ‘IND A’ with a stable outlook, citing improved profitability, asset quality, and capital position.SMBC, part of Sumitomo Mitsui Financial Group, has expanded its India presence steadily since opening its first branch in New Delhi in 2012, followed by Mumbai, Chennai and Gift City, and recently secured RBI approval for a Bengaluru branch.

Its India strategy is centred on corporate and trade finance, catering to Japanese and multinational clients. Before SMBC, Singapore-based DBS had acquired Lakshmi Vilas Bank, which it later merged with its India operations.As of June 2025, Yes Bank reported a capital adequacy ratio of 16.2% and Tier I capital of 14%. Net NPAs, net security receipts and restructured assets together accounted for just 0.5% of advances, while gross NPAs fell to 1.6% from 16.8% in FY20.

The provision coverage ratio stood at 80%.The bank’s loan book is increasingly tilted toward retail and SME lending, which rose to about 60% of advances in FY25 from 36% in FY20. Retail loans formed 49.4% of the book in Q1FY26, while retail deposits accounted for 61% of total deposits. Total deposits stood at Rs 2.8 trillion with a CASA ratio of 32.8%.