MUMBAI: The Reserve Bank of India (RBI) has approved Sumitomo Mitsui Banking Corporation (SMBC) to acquire up to 24.99% in Yes Bank 's paid-up share capital and voting rights, a move that would make the Japanese lender the largest shareholder, ahead of SBI.
The approval, issued on Aug 22 and valid for one year, also clarified that SMBC would not be classified as a promoter. The transaction remains subject to clearance from the Competition Commission of India (CCI) and other customary conditions. The deal involves SMBC purchasing a 20% stake, including 13.19% from State Bank of India (SBI) and 6.81% from a group of private banks.
The investment, estimated at about $1.6 billion, would be the largest foreign investment in an Indian bank. SBI will retain around 10.8% after the transaction, which is expected to conclude by Sept.
SMBC will also gain the right to nominate two directors to Yes Bank's board.
In July, India Ratings and Research upgraded Yes Bank's long-term issuer rating to 'IND AA-' from 'IND A' with a stable outlook, citing improved profitability, asset quality, and capital position.
SMBC has expanded its India presence steadily since opening its first branch in New Delhi in 2012, followed by Mumbai, Chennai and Gift City, and recently secured RBI approval for a Bengaluru branch.
The approval, issued on Aug 22 and valid for one year, also clarified that SMBC would not be classified as a promoter. The transaction remains subject to clearance from the Competition Commission of India (CCI) and other customary conditions. The deal involves SMBC purchasing a 20% stake, including 13.19% from State Bank of India (SBI) and 6.81% from a group of private banks.
The investment, estimated at about $1.6 billion, would be the largest foreign investment in an Indian bank. SBI will retain around 10.8% after the transaction, which is expected to conclude by Sept.
SMBC will also gain the right to nominate two directors to Yes Bank's board.
In July, India Ratings and Research upgraded Yes Bank's long-term issuer rating to 'IND AA-' from 'IND A' with a stable outlook, citing improved profitability, asset quality, and capital position.
SMBC has expanded its India presence steadily since opening its first branch in New Delhi in 2012, followed by Mumbai, Chennai and Gift City, and recently secured RBI approval for a Bengaluru branch.
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