The Reserve Bank of India (RBI) has decided to grant ‘in-principle’ approval to Sumitomo Mitsui Banking Corporation (SMBC), Japan for setting up a Wholly Owned Subsidiary (WOS) in India.
SMBC is currently carrying on banking business in India in branch mode through its four branches located in New Delhi, Mumbai, Chennai and Bengaluru. The ‘in-principle’ approval has been granted to the bank for setting up a WOS through conversion of its existing branches in India.
A wholly-owned subsidiary is a separate legal entity in India that allows a bank treatment similar to local peers, including freedom to open branches without restriction.
Why SMBC wants to work in India?
SMBC has chosen India as one of its focus markets, besides Indonesia, Vietnam and Philippines, as it presents a multi-decade strong growth story, the GDP per capita is relatively low ($2,820), and there is an opportunity for the financial services sector to grow.
SMBC has a rich experience of operating in India through its non-banking financial company (NBFC) SMBC Credit. SMBC Credit, which has 829 branches across India, offers personal loans, working capital loans, SME financing and two-wheeler loans.
Last year, SMBC acquired 24.22% stake in Yes Bank. With this transaction, SMBC had become Yes Bank’s largest shareholder, while SBI continues to hold a significant stake of over 10%. SMBC initially paid about ₹13,480 crore to acquire a 20 percent stake in Yes Bank, followed by an additional ₹2,900 crore for a 4.2 percent stake sale from an affiliate of Carlyle Group in Yes Bank.
About SMBC
Sumitomo Mitsui Banking Corporation (SMBC) is a Japanese multinational banking financial services institution owned by the Sumitomo Mitsui Financial Group, which is also known as the SMBC Group. It is headquartered in the same building as SMBC Group in Marunouchi, Chiyoda, Tokyo, Japan.
SMBC was established in 2001 through the merger of the Sakura Bank, which originated from the Mitsui zaibatsu and was founded as Mitsui Bank in 1876, and The Sumitomo Bank, which originated from the Sumitomo zaibatsu and was founded in 1895.
