Sumitomo Mitsui Banking Corporation Receives Preliminary Approval to Establish a Subsidiary in India
Sumitomo Mitsui Banking Corporation (SMBC), one of Japan’s leading financial institutions, has obtained preliminary approval from the Reserve Bank of India (RBI) to establish a wholly owned subsidiary in India. This significant move will enhance SMBC’s operations in the thriving Indian market and expedite the conversion of its existing branches into a subsidiary.
Currently, SMBC operates branches in New Delhi, Mumbai, Chennai, and Bengaluru, along with an office at the International Financial Services Centre in GIFT City, Gujarat. The bank’s presence in these key Indian cities underscores its commitment to expanding its financial services in the region.
Converting Existing Branches into a Subsidiary
The central bank’s initial approval for SMBC to form a wholly owned subsidiary (WOS) is contingent on regulatory compliance. This means that the Japanese bank can proceed to convert its Indian branches into a subsidiary, provided it complies with all set regulations. The final banking licence will be considered by the RBI once all stipulated conditions are met.
The RBI stated, “The in-principle approval has been granted to the bank for setting up a WOS through the conversion of its existing branches in India.” The RBI will proceed with the conversion only after verifying compliance with all requirements set under this approval.
SMBC’s Growing Interest in India’s Banking Sector
In September last year, SMBC announced an agreement with CA Basque Investments, affiliated with The Carlyle Group, to increase its interest in Yes Bank by a further 4.2%. This followed SMBC’s earlier acquisition of a 20% stake in Yes Bank in May of the same year. The transaction for the initial 20% holding was valued at Rs 134.8bn ($1.57bn), including a 13.19% acquisition from the State Bank of India and 6.81% from other banks.
These strategic investments demonstrate SMBC’s growing interest in India’s banking sector and its intention to strengthen its foothold in the country.
SMBC’s Recent US Operations
In recent developments, SMBC Group made headlines by closing its digital banking division in the United States, Jenius Bank. This decision affected 161 employees across various US locations, reflecting the bank’s strategic shift in its global operations.
With its focus now shifted towards growing markets such as India, SMBC continues to adapt its strategies to align with global financial trends and opportunities. As the bank expands its operations in India, it is poised to contribute significantly to the country’s banking sector.
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