Japan’s SMFG Bank May Merge its Indian NBFC with YES Bank After Acquiring 20% Stake

Sumitomo Mitsui Financial Group (SMFG), a major Japanese financial company, might merge its Indian non-banking financial company (NBFC), SMFG India Credit, with YES Bank. This could happen after SMFG’s group entity, SMBC, completes its acquisition of a 20% stake in YES Bank, sources shared with BusinessLine.

Why the Merger Could Happen

According to experts, this merger makes sense for Sumitomo Mitsui for a couple of reasons.

• RBI Regulations: The Reserve Bank of India (RBI) has rules that banks cannot own subsidiaries that operate in the same lending business. Since both YES Bank and SMFG India Credit offer similar loan products such as home loans, personal loans, and business loans, they could be seen as competing with each other.
• Expansion Plans: If Sumitomo Mitsui wants to grow its footprint in India beyond just the 20% stake in YES Bank, merging its NBFC with the bank would help simplify operations and meet regulatory requirements. It would allow YES Bank to offer a broader range of lending products while maintaining a single point of presence for all financial services.

What This Means for YES Bank and SMFG

• YES Bank could gain stronger lending capabilities and better market presence by integrating SMFG India Credit’s loan portfolio.
• SMFG India Credit, which operates in similar sectors, could benefit from the merger by gaining better access to India’s growing banking market under YES Bank’s umbrella.

Conclusion

This potential merger between SMFG India Credit and YES Bank could be a strategic move to help Sumitomo Mitsui expand its presence in India’s banking and lending sector while complying with RBI guidelines. With the 20% stake acquisition already underway, the merger could reshape how the two entities operate in the country.