Sumitomo Mitsui Banking Corporation (SMBC) said on Wednesday that it has infused $600 million into its India operations this year. The infusion doubles SMBC’s capital commitment to its India operations (to $1.2 billion). It added that it will open a new branch in Chennai.
This is the second major announcement this week by a foreign financial player on making substantial investments in India. On Tuesday, DBS group of Singapore proposed to infuse Rs 2,500 crore into troubled Indian private lender Lakshmi Vilas Bank (LVB), as part of plans to amalgamate LVB with DBS Bank India.
In response to queries from Business Standard, SMBC said it will expand India operations further. The Chennai branch will be SMBC’s third in India after those in New Delhi and Mumbai, and the bank said it will help it grow in the southern region. The capital injection would allow the bank to substantially increase the group borrower and single borrower exposure limits to better serve customers, said Toshitake Funaki, country head of India and general manager of the New Delhi branch. It has about 220 people working across India and it will expand (hiring) further, the bank said.
SMBC started Indian operations in December 2012 with its first branch in New Delhi. In March 2017, it opened its second branch in Mumbai. Its business, deposits and advances, was Rs 25,400 crore as of March 31. SMBC maintains a strategic alliance with Kotak Mahindra Bank since the acquisition of a minority stake in 2010, and with Northern Arc Capital, where SMBC acquired a 5.4 per cent equity interest in December 2019.
On capitalising India’s IT prowess, SMBC said, “We do not have specific plans to establish new technology centre in India, but will commence assessing these plan along with our regional (Asia Pacific) head office in Singapore”. The Chennai branch will assist SMBC grow its customer base in South India. It will provide services to firms operating in Tamil Nadu and neighbouring regions. These include companies operating in sectors as diverse as automotive, consumer durables, technology and others.
The bank is aiming to become more Asia-centric and India remains extremely vital for its global growth, it said.