Japanese financial powerhouse Sumitomo Mitsui Corporation (SMBC) is reportedly discussing buying the majority stake in India’s Yes Bank. According to reports, both institutions were discussing the deal for several months.
Notably, the State Bank of India (SBI) has been planning to trim its stake in Yes Bank. As of now, SBI is the largest stakeholder in Yes Bank, holding a 24% stake. Several other financial institutions own stock in Yes Bank, including HDFC Bank, ICICI Bank, Kotak Mahindra Bank, Axis Bank and state-run LIC, holding 11.34 %.
Two private equity funds, Verventa Holdings Limited and Ca Basque Investments, own 16% in Yes Bank. However, it is not clear which bank will exit Yes Bank.
According to the reports, SBMC received verbal assurance from the Reserve Bank of India (RBI) that it would be allowed to retain the majority of its stake.
However, foreign direct investment (FDI) allows only 74% overseas participation in Indian private banks, with each entity’s holding capped at 15%. FDI norms do not permit a single foreign banking institution to take a controlling stake in an Indian bank.
SMBC’s acquisition of a controlling stake in Yes Bank could mark a significant shift in India’s banking sector, attracting increased foreign investment and potentially enhancing Yes Bank’s competitive position in the market. Yes Bank is a renowned bank in India and is also listed among the 100 most valuable financial companies in terms of market capitalisation.
