RBI gives nod to Japan's SMBC to set up subsidiary in India; what it means for YES Bank

The Reserve Bank of India (RBI) on Wednesday granted 'in-principle' approval to Japan's Sumitomo Mitsui Banking Corporation (SMBC) to set up a wholly-owned subsidiary (WOS) in India.

SMBC currently conducts banking operations in India in branch mode through four branches located in New Delhi, Mumbai, Chennai and Bengaluru. The 'in-principle' approval allows the Japanese lender to establish the WOS through the conversion of its existing branches in the country.

In a statement, the central bank said it would consider granting a licence for the commencement of banking business in WOS mode under Section 22(1) of the Banking Regulation Act, 1949, after being satisfied that SMBC has complied with the conditions stipulated as part of the 'in-principle' approval.

In 2025, the Japanese lender acquired a 24.22 per cent stake in YES Bank, making it the private sector lender's largest shareholder. State Bank of India (SBI), which had earlier held a 24 per cent stake, now owns a little over 10 per cent following dilution.

YES Bank had stated earlier that it intends to leverage SMBC's global capabilities, particularly in facilitating trade and investment flows between Japan and India. The partnership is aimed at supporting growth in areas such as corporate banking, treasury services and cross-border banking solutions.

The crisis-hit private lender was rescued in March 2020, weeks before the onset of the Covid-19 pandemic, through a reconstruction scheme led by the RBI and the government. Under the plan, a consortium of banks headed by SBI infused capital into the lender.

The RBI announcement came post-market hours today. Earlier in the day, shares of YES Bank rose 0.70 per cent to close at Rs 22.95.