SMBC’s India Playbook: Steady Stake of 25% in YES Bank, Big Vision for Non-Banking Finance

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SMBC Group India plans to maintain its YES Bank stake below 24.99% while focusing on scaling up its Non-Banking Financial Companies business. The group is not actively seeking further YES Bank shares, prioritizing regulatory compliance and strategic growth based on YES Bank’s strengths.

Sumitomo Mitsui Financial Group (SMBC) India is focusing on scaling its business cautiously while leveraging its strengths, especially in relation to its holding in YES Bank and expansion plans in the Non-Banking Financial Company (NBFC) sector. The head of SMBC Group India recently provided exclusive insights about the group’s strategic plans where the company aims to grow within regulatory frameworks without triggering an open offer.

Key Highlights:

SMBC Group has completed its significant acquisition of an initial 20% stake in YES Bank, with plans to increase its holding to approximately 24.2%, staying within the regulatory limit of 24.99%, thus avoiding the need for an open offer.

The group is confident about YES Bank’s prospects but is not actively looking to increase its stake beyond the current plan, emphasizing investment based on the bank’s own strengths.

SMBC India is also focusing on expanding its Non-Banking Financial Companies (NBFC) business in the country, viewing it as a strategic area for scaling operations and tapping into India’s growing credit market beyond traditional banking.

Regulatory compliance remains a strong priority, with the group intending to maintain stake sizes that comply fully with India’s Securities and Exchange Board (SEBI) and Reserve Bank of India (RBI) norms.

YES Bank recently achieved significant capital boost and credit rating upgrades, partly backed by SMBC’s investment reflecting confidence in the bank’s future growth and governance strength.

SMBC’s partnership with YES Bank underscores a long-term commitment to the Indian market, combining global expertise with a localized approach.

The deal includes nomination of two SMBC directors to YES Bank’s board, aiming for enhanced governance and strategic collaboration.

Additionally, as part of portfolio management, SMBC divested its entire 1.65% stake in Kotak Mahindra Bank in September 2025, signaling focus on selective investments in key growth areas.

Industry analysts view SMBC's measured approach as a strategic balance between growth ambitions and regulatory prudence in the evolving Indian banking landscape.

This careful expansion aligns with macroeconomic trends favoring non-bank finance sectors alongside traditional banking.

Sources: Sumitomo Mitsui Financial Group official release, Economic Times, Reuters, LinkedIn SMBC

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