Yes Bank deal: How SBI and private banks pulled off a ₹13,483 cr tax-free windfall

SBI and a group of private banks are set to pocket a tax-free windfall from the ₹13,483-crore sale of their stake in Yes Bank to Japan’s Sumitomo Mitsui Banking Corp (SMBC), according to The Economic Times.

The stake sale, expected to conclude in the September quarter, will earn selling banks substantial capital gains—without attracting any capital gains tax. That’s thanks to a clause in the Yes Bank Reconstruction Scheme, 2020, which exempts investors who participated in the 2020 bailout from such taxes under the Income-tax Act.

SBI will sell 13.19% of its 24% stake for ₹8,889 crore, while seven private banks—including HDFC Bank, ICICI Bank, Axis Bank, and Kotak Mahindra Bank—will offload a combined 6.81% for ₹4,594 crore. The banks had originally subscribed to Yes Bank shares at ₹10 each and are now selling at ₹21.50 per share.

According to the report, the proceeds will be booked as “other income” for the banks, offering a timely boost to earnings amid margin pressures and declining treasury gains. Without the exemption, the long-term capital gains tax could have been as high as 12.5%. Business Today could not independently verify the report, and both Yes Bank and SMBC have yet to issue a statement.

SMBC, the Japanese banking giant, will acquire a 20% stake in Yes Bank in this secondary market deal and has also received RBI approval to appoint two nominee directors to the bank’s board. The RBI has greenlit SMBC’s request to raise its stake to 24.99%, which could be achieved through acquiring more shares from private equity investors Advent and Carlyle or subscribing to new preferential shares.

SMBC is reportedly also in talks to infuse ₹16,000 crore into Yes Bank through a mix of equity and debt.