SMBC open to bigger Yes Bank stake; plans for India unit under consideration: Report

India head Rajeev Kannan said the regulators allowed SMBC to acquire up to 24.99 percent and, if permitted, they are open to buy more

Sumitomo Mitsui Banking Corporation (SMBC) is considering to open a wholly owned unit in India, managing executive officer and India head Rajeev Kannan said in an interview with The Economic Times.

Kannan told ET that it’s important to have a local unit in the country for the long run and the company is seriously working on it. However, SMBC India chief declined to comment on if the lender has applied for a local unit license with the Reserve Bank of India (RBI).

The Japanese financial institution is the largest shareholder in Yes Bank after it acquired 24.99 percent stake in the domestic lender in September this year. Kannan said the regulators allowed SMBC to acquire up to 24.99 percent and, if permitted, they are open to buy more.

Kannan told the newspaper that Yes Bank was the “right size” for them as they were looking to become a player in India’s banking industry. SMBC has different businesses already in the country. It has a housing finance company - SMFG Grihashakti, an NBFC that began as a tier-3, tier-4 business and a branch of SMBC Bank that caters mostly to Indian companies, MNCs and Japanese firms apart from the now-acquired Yes Bank. However, there is not much overlap between these companies, Kannan pointed out.

He also said the SMBC wants to turn Yes Bank into a creditable private sector bank and among the country’s top 5 lenders in the future.