Yes bank stake sale news: Sumitomo Mitsui Banking Corporation (Sumitomo Mitsui Banking Corp – SMBC) has announced the purchase of 20% stake in YES Bank. This has led to a new debate towards foreign investment in the Indian banking sector. This step can create new opportunities for foreign banks’ entry into India.
Who is selling stake in Yes Bank?
Major institutions selling the share of YES Bank include State Bank of India (SBI), IDFC, Federal, Bandhan, ICICI and HDFC. These banks bought YES Bank shares at a price of ₹ 10 in 2015 and now the sales tax at ₹ 21.50 has made a profit of 115%, which is an increase of more than 20% per year. According to SBI analysts, SBI’s profits from this deal may increase by 7.5% in FY26.
How will Yes Bank benefit from this deal?
SMBC’s investment will give Yes Bank a stable and global partner, which can prove to be helpful in raising capital. This investment of SMBC can benefit YES Bank for providing services to foreign business customers, participation in lead loan syndication deals and better cash management capabilities. The SMBC already holds a 74% stake in the NBFC sector in India, and this step may be part of the plan to further strengthen its position in the banking sector.
Why SMBC is buying a stake in Yes Bank?
Under the SMBC’s global strategy, India has emerged as an attractive market, especially in view of slow economic growth in Japan. SMBC had already bought a 74% stake in Fullerton in India, and now aims to further increase its investment with partnership with YES Bank. His intention in India’s financial market
What will be the challenge of RBI limit?
Under the policy of the Reserve Bank of India (RBI), no foreign bank can buy more than 26% stake in any one Indian bank. This condition prevents foreign banks from taking full control of Indian banks. However, some discounts have been given for threatened banks, as seen in cases of Catholic Syrian Bank and Lakshmi Vilas Bank. SMBC has bought 20% stake in YES Bank keeping this limit in mind.
Will SMBC further increase its stake?
The SMBC has already intended to buy more stake in Yes Bank. According to a report by news agency Reuters, SMBC actually wanted to buy a 51% stake in Yes Bank. The deal regarding this matter was also stuck for a long time. However, RBI did not relax the rules. If the RBI relaxes its policies in the future, the SMBC can increase its stake in Yes Bank.
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