Japanese lender Sumitomo Mitsui Banking Corporation (SMBC) has no immediate plans to increase its stake in Yes Bank beyond the current 24.99%, according to a senior executive from the bank, as reported by Reuters on Friday.
The initial stake acquisition, announced in May, marked a significant overseas investment by a Japanese financial institution seeking new growth avenues after years of persistently low interest rates in Japan. However, SMBC is proceeding cautiously with this major investment in India, contrary to market analysts’ expectations for a swift move to seek approval for raising its stake or launching an open offer.
Rajeev Kannan, Group Executive Officer and Head of SMBC Group’s India division, stated that the bank is intent on supporting Yes Bank’s growth as its largest shareholder and board member, noting there are no plans to assume an executive role within the bank. “We are not actively looking at increasing our stake in Yes Bank beyond the regulatory permissible limit of 24.99%,” Kannan said. He emphasized the need for Yes Bank to enhance its cost of funds, return on assets, and return on equity in comparison to competitors.
Currently, SMBC holds 24.2% in Yes Bank. Under Indian takeover regulations, any acquisition of 25% or more prompts a mandatory open offer to purchase an additional minimum of 26% from public shareholders, which could result in a controlling stake of 51%.
In August, SMBC received the Reserve Bank of India’s approval to acquire up to a 24.99% stake in Yes Bank from the State Bank of India and seven other shareholders, following a deal in May to purchase a 20% stake for $1.6 billion. This transaction represents India’s largest cross-border financial sector merger and acquisition.
Kannan indicated that the State Bank of India plans to maintain its significant shareholding, currently at 10.8%. Following the news, shares of Yes Bank fell over 4% to ₹22.1, though they had previously been trading 0.8% lower. Since the announcement of the deal in May, Yes Bank’s shares have appreciated by more than 20%.
Broader Plans in India
SMBC Group, which has made investments totaling $7 billion in India, intends to keep its non-bank lending division, SMFG Credit, separate from its investment in Yes Bank. Kannan noted, “We have made a significant investment into the NBFC platform and our intention is to scale it up.” He mentioned that there may be future possibilities for integration but emphasized the current focus on assessing each entity independently.
As of March 31, 2025, SMFG Credit reported assets under management totaling $6.5 billion. Kannan also stated that the group has not yet applied to establish a wholly owned subsidiary in India, although they continue to evaluate this option. India’s banking regulator encourages but does not mandate foreign banks to form wholly-owned subsidiaries, which would allow them rights comparable to those of domestic banks, with capital separate from the parent institution.
Additionally, SMBC Group is exploring opportunities in wealth management and investment banking in India via Yes Bank and its securities platform. Kannan mentioned that the group may also consider entering the asset management sector in the future, given their investment in Sumitomo Mitsui DS Asset Management.
Published on October 17, 2025.
