SMBC Yes Bank Deal : Japanese lender SMBC gets RBI approval to acquire up to 24.99% in Yes Bank, marking the largest cross-border investment in India’s banking sector; SBI, other banks to sell shares.
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RBI Approves SMBC’s Big Move in Yes Bank
Yes Bank has announced that the Reserve Bank of India (RBI) has given the green light to Japanese lender Sumitomo Mitsui Banking Corporation (SMBC) to acquire up to 24.99% stake in the private bank.
This deal not only marks a massive foreign investment in the Indian banking sector but also gives SMBC two seats on Yes Bank’s board.
The Journey of the Deal
- In May 2025, SMBC revealed plans to buy a 20% stake in Yes Bank for ₹13,482 crore, making it the largest cross-border investment in Indian banking.
- Later in July 2025, reports suggested SMBC was eyeing another 4.9% stake, taking its total to just under 25%.
- The RBI approval, dated 22 August 2025, is valid for one year.
To enable this transaction:
- State Bank of India (SBI) will offload 13.19%.
- Seven other banks — Axis Bank, HDFC Bank, ICICI Bank, Kotak Mahindra Bank, Federal Bank, Bandhan Bank, and IDFC First Bank — together will sell 6.81%.
Background: Yes Bank’s Troubled Past
Yes Bank had a major crisis back in March 2020, when the RBI had to step in and replace its board due to financial instability. The bank was later saved by a consortium of Indian banks, led by SBI.
Currently, Yes Bank has no single promoter — it is fully owned by public shareholders.
SMBC’s Role and RBI’s Conditions
- Even after acquiring the stake, SMBC will not be considered a promoter of Yes Bank.
- The deal still needs approval from the Competition Commission of India (CCI).
- The Japanese bank will also get representation on key board committees, though some proxy advisory firms have raised concerns about this.
Why This Deal Matters
This investment sets a new example for foreign capital inflow into Indian banks.
- As per Indian rules, foreign investors can hold up to 26% voting rights in banks.
- SMBC’s entry shows that foreign banks see strong long-term growth in India’s financial sector.
Earlier, the RBI had also allowed DBS Bank (Singapore) to take over Lakshmi Vilas Bank in 2020 — the first case where a foreign lender rescued a struggling Indian bank.
What’s Next for Yes Bank?
- Yes Bank CEO Prashant Kumar’s term ends in April 2025, and the bank will soon begin its search for a new chief.
- The stake sale has also addressed SBI’s long-pending exit plan, which was a big overhang on Yes Bank’s stock.
- Investors seem optimistic — Yes Bank shares closed at ₹19.28 on NSE, nearly 6% higher since the deal was announced.
FAQs
Q1: How much stake will SMBC hold in Yes Bank?
SMBC has RBI’s approval to acquire up to 24.99% stake in Yes Bank.
Q2: Will SMBC become a promoter of Yes Bank?
No. RBI has clarified that SMBC will not be treated as a promoter even after the acquisition.
Q3: Which Indian banks are selling their stake to SMBC?
SBI (13.19%) and seven other banks including Axis, HDFC, ICICI, Kotak Mahindra, Federal, Bandhan, and IDFC First Bank are selling a combined 6.81%.
Q4: Why is this deal important?
It’s one of the largest foreign investments in Indian banking, showing global confidence in India’s financial system.
Q5: What happens next?
The deal still requires approval from the Competition Commission of India (CCI) and will be completed after regulatory clearances.