Japanese Bank to Own 20% of Yes Bank

Japanese financial institution Sumitomo Mitsui Banking Corp. (SMBC) is to acquire a 20% stake in Yes Bank. This is to be done through a significant share sale by the State Bank of India (SBI) and other large Indian banks. The entire deal amounts to approximately Rs. 13,484 crore.

SBI would be offloading 13.19% of its Yes Bank holding to SMBC at around Rs. 8,890 crore. It will sell 413 crore shares at Rs. 21.5 each. The transaction would proceed only after all necessary approvals are in place. The transaction is targeted to be completed in the next 12 months.

Besides SBI, there are other banks such as HDFC Bank, ICICI Bank, Kotak Mahindra Bank, Axis Bank, IDFC First Bank, Federal Bank, and Bandhan Bank which will also offload a 6.81% stake in Yes Bank. SMBC will purchase 213.68 crore shares from them for approximately Rs. 4,594 crore.

Once it purchases these shares, SMBC will hold 20% of Yes Bank. This is viewed as the initial step in SMBC’s strategy to assume a greater position in the Indian bank. SMBC can also attempt to raise its stake further by merging its firm SMFG India Credit with Yes Bank.

SMFG India Credit, previously Fullerton India, is a major Indian non-banking finance company in which SMBC has a majority holding. SMFG India Credit had assets of Rs. 53,100 crore as of December 31. It had a 23.9% capital adequacy and an NPA ratio as low as 1.4%.

The Reserve Bank of India (RBI) has regulations in place for such transactions. Such a purchase up to 4.99% stake in any private bank by any investor doesn’t require the approval of anyone. For the purchase of over that, RBI approval is essential. If an investor wishes to purchase over 10%, RBI verifies whether the investor is “fit and proper” to have such ownership.

Shares of Yes Bank have been in the limelight since March 2020 when the bank was facing financial crisis. Then, SBI led the consortium of 10 banks to invest Rs. 10,000 crore to rescue Yes Bank. SBI had initially held 40% stake, but now it has reduced to around 24%.

As of March 2025, Yes Bank had loans of Rs. 2.46 lakh crore and deposits of Rs. 2.84 lakh crore. Its capital adequacy ratio was 15.6% with a Tier-1 capital ratio of 12.2%. The gross NPA ratio stood at 1.6% and the net NPA ratio at a mere 0.3%.

This investment by SMBC can prove to be a significant turning point for Yes Bank, making it stronger with the help of foreign capital.