Japan's SMBC gets RBI's in-principle nod for wholly owned arm in India

The in-principle approval allowed the bank to set up the wholly owned subsidiary through the conversion of its existing branches in the country

The Reserve Bank of India (RBI) has granted in-principle approval to Japan’s Sumitomo Mitsui Banking Corporation (SMBC) to establish a wholly owned subsidiary in India, it said in a press release on Wednesday.

 

The approval was issued under the RBI (Setting Up of Wholly Owned Subsidiaries by Foreign Banks) Guidelines, 2025.

 

SMBC currently carries on banking business in India “in branch mode through its four branches located in New Delhi, Mumbai, Chennai and Bengaluru”, the RBI said.

 

It added that the “in-principle approval has been granted to the bank for setting up a WOS through the conversion of its existing branches in India”.

Licence subject to compliance

The RBI said it would consider granting a licence for the commencement of banking business in the WOS mode under Section 22(1) of the Banking Regulation Act, 1949.

 

This would be done only after the central bank was “satisfied that the bank has complied with the requisite conditions laid down by the RBI as part of the ‘in-principle’ approval”.

 

The development formed part of the RBI’s framework governing the presence of foreign banks in India, which allows overseas lenders to operate either through branches or as wholly owned subsidiaries, subject to regulatory requirements.  Notably, SMBC has expanded its presence in India through investments in the banking sector. Last year, the Japanese lender acquired a major stake in YES Bank, which made it the largest shareholder after purchasing shares from Carlyle Group and other lenders. The transaction, which took its holding to about 24.2 per cent, received approval from the RBI.