In a significant development for the Indian banking sector, the Reserve Bank of India (RBI) has granted approval to Sumitomo Mitsui Banking Corporation (SMBC) to acquire up to 24.99% stake in Yes Bank. This move marks a substantial foreign investment in one of India's private sector banks and has the potential to reshape its ownership structure. The RBI's approval is valid for one year from August 22, 2025.
The approved stake acquisition is part of a larger transaction that Yes Bank had previously disclosed to the stock exchanges on May 9, 2025. The proposed deal includes a secondary stake purchase of 13.19% from the State Bank of India (SBI) and an additional 6.81% stake acquisition from seven other shareholders, including Axis Bank, Bandhan Bank, Federal Bank, HDFC Bank, ICICI Bank, IDFC First Bank, and Kotak Mahindra Bank.
SMBC, a wholly-owned subsidiary of Sumitomo Mitsui Financial Group (SMFG), had earlier announced its intent to purchase the 20% stake of Yes Bank for ₹13,482 crore. This marks the largest cross-border investment in India's banking sector. SMFG is Japan's second-largest banking group, managing assets worth $2 trillion as of December 2024. In July 2025, Reuters reported that SMBC had also sought approval to raise its stake by an additional 4.9%.
Despite the significant shareholding, the RBI has clarified that SMBC will not be designated as a promoter of Yes Bank. Currently, Yes Bank has no promoter and is fully owned by public shareholders. The transaction remains subject to approval from the Competition Commission of India (CCI) and fulfillment of other customary conditions.
The investment is estimated at about $1.6 billion and would be the largest foreign investment in an Indian bank. After the transaction, SBI will retain around 10.8% stake in Yes Bank. SMBC will also gain the right to nominate two directors to Yes Bank's board.
This deal is expected to pave the way for similar transactions in the future, where foreign capital will be able to seamlessly flow into the Indian banking sector.
In related news, Yes Bank's shareholders approved 11 resolutions at their 21st Annual General Meeting (AGM) on August 21, 2025, including financial statements adoption, appointments, and fundraising plans. The bank reported a 92.3% increase in net profit to ₹2,406.00 crore for FY 2024-25, with total assets at ₹4.23 lakh crore and deposits crossing ₹2.85 lakh crore.
Yes Bank is focusing on digital capabilities, partnerships, corporate governance, and ESG integration. The bank's loan book is increasingly tilted toward retail and SME lending, which rose to about 60% of advances in FY25 from 36% in FY20. Retail loans formed 49.4% of the book in Q1FY26, while retail deposits accounted for 61% of total deposits. Total deposits stood at Rs 2.8 trillion with a CASA ratio of 32.8%.
Furthermore, Yes Bank has extended the tenure of its Managing Director and Chief Executive Officer, Prashant Kumar, until April 5, 2026. Kumar has been at the helm since March 2020 and has played a crucial role in the bank's turnaround and stabilization efforts.
