Japanese giant Sumitomo Mitsui Financial Group (SMFG) is likely to merge its Indian non-bank arm SMFG India Credit with YES Bank after its group entity SMBC completes acquiring a 20 per cent stake in YES Bank, a report by Business Line stated, citing sources.
“Technically, if Sumitomo wants to increase stake in YES Bank, since they already have a NBFC in India — SMFG India Credit — they may want to merge that NBFC with YES Bank,” Abizer Diwanji, Founder of NeoStrat Advisors, told Business Line. This, he added, is because of the RBI’s norms that for lending side businesses, banks should have a single point of presence. “If they really want to expand their presence in India, they should go for that move, otherwise there are only so many things you can do with 20 per cent stake,” he said.
According to the Reserve Bank of India’s (RBI) guidelines, post this deal, merging SMFG India Credit and YES Bank becomes important as the central bank does not allow banks to own subsidiaries which are active in the same segment of lending as the bank. SMFG India Credit offers home loans, business loans, personal loans, among others. These are the segments where YES Bank already has exposure.
Earlier, in an interaction with CNBC TV18, Prashant Kumar, MD & CEO, Yes Bank, had said that the transaction with SMBC is significant in the Bank’s transformation journey and had hoped that it will be completed by the second quarter of FY26.
The deal with the Japanese giant will strengthen Yes Bank’s future prospects, open doors to fresh opportunities and could potentially lead to a ratings upgrade.