RBI clears SMBC’s plan to acquire up to 24.99% stake in Yes Bank

Private sector lender Yes Bank on Saturday announced that the Reserve Bank of India (RBI) has granted approval to Sumitomo Mitsui Banking Corporation (SMBC) for acquiring up to 24.99% of its paid-up share capital and voting rights. Notably, the RBI clarified that SMBC will not be classified as a promoter of Yes Bank after the acquisition.

The development was shared by Yes Bank through a regulatory filing, which added that the approval will remain valid for one year from August 22, 2025. The acquisition is linked to SMBC’s plan to increase its stake in Yes Bank to 20% through a secondary purchase.

The proposed deal includes a 13.19% stake to be purchased from the State Bank of India, along with another 6.81% to be acquired from seven other shareholders — Axis Bank, Bandhan Bank, Federal Bank, HDFC Bank, ICICI Bank, IDFC First Bank, and Kotak Mahindra Bank.

“Yes Bank had earlier disclosed on May 9, 2025, its plan for Sumitomo Mitsui Banking Corporation (“SMBC”) to acquire a 20% shareholding through a secondary purchase of 13.19% from State Bank of India and 6.81% collectively from Axis Bank Limited, Bandhan Bank Limited, Federal Bank Limited, HDFC Bank Limited, ICICI Bank Limited, IDFC First Bank Limited, and Kotak Mahindra Bank Limited (“Proposed Transaction”),” the filing read.

The bank further stated that any subsequent stake purchases will remain subject to RBI’s conditions and regulatory clearances.

Completion of the transaction is also contingent upon obtaining the nod from the Competition Commission of India (CCI) and meeting the customary conditions outlined in the agreements announced in May 2025.

SMBC, a wholly-owned unit of Sumitomo Mitsui Financial Group (SMFG), had earlier announced its intent to purchase the 20% stake of Yes Bank for Rs 13,482 crore. This marks the largest cross-border investment in India’s banking sector. SMFG is Japan’s second-largest banking group, managing assets worth $2 trillion as of December 2024. In July, Reuters reported that SMBC had also sought approval to raise its stake by an additional 4.9%.

RBI further clarified that SMBC’s acquisition would not alter Yes Bank’s status, as the lender has no promoters and remains entirely owned by public shareholders. The bank reiterated that the transaction “is subject to CCI approval and customary conditions precedent under agreements referred to in our May 9 disclosure.”

On Friday, shares of Yes Bank closed 0.8% lower at Rs 19.28 on the BSE.

Analysts suggest the deal could open doors for similar large-scale investments in Indian banks. As Fitch Ratings has highlighted, India’s foreign investment rules limit voting rights in banks to 26% and financial institution stakes to 15%, constraints that have previously discouraged such deals.