india-s-largest-cross-border-banking-deal-takes-shape

In what is shaping up as the biggest foreign investment in an Indian bank till date, Sumitomo Mitsui Banking Corporation (SMBC) is all set to acquire a 24.99 per cent stake in Yes Bank after securing an approval from the Reserve Bank of India (RBI) on Friday.

 

The RBI, however, clarified that the approval, valid for one year, would not categorise SMBC as a “promoter” of Yes Bank. As of now, the Japanese bank holds a 20 per cent stake in Yes Bank, which was finalised in May through secondary share purchases.

 

“We are pleased to inform that SMBC has received the approval of the RBI to acquire up to 24.99 per cent of the paid-up share capital/voting rights of the bank vide letter dated August 22, 2025. This approval is valid for one year from the date of this letter. The RBI has further clarified that pursuant to the said acquisition, SMBC would not be treated as a promoter of the bank,” clarified a regulatory filing.

 

The Japanese bank had signed a deal in May to acquire a 20 per cent stake in the private lender for $1.6 billion. It later sought RBI approval for an additional 4.9 per cent stake in Yes Bank. The plan involved SMBC purchasing a 13.19 per cent stake from the State Bank of India and a 6.81 per cent stake from seven other private banks, subject to regulatory approvals from the Competition Commission of India. The purchase was valued at approximately $1.6 billion.

 

SMBC has already purchased a 13.19 per cent stake from the State Bank of India. It also holds a 6.81 per cent stake acquired from seven other private banks, including Axis Bank, Bandhan Bank, Federal Bank, HDFC Bank, ICICI Bank, IDFC First Bank and Kotak Mahindra Bank. The Japanese multinational banking financial services institution has now received RBI approval for a 4.9% additional stake in Yes Bank.

 

However, the fact that SMBC will not be considered a “promoter” of Yes Bank implies that it would not have control over day-to-day decisions. At the same time, SMBC will be able to nominate two directors to Yes Bank’s board, which will help it influence the bank’s decisions. The deal now awaits approval from the Competition Commission of India before it is finalised.