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RBI Grants In-Principle Nod to Japan's SMBC for Wholly Owned India Subsidiary

The Reserve Bank of India has granted in-principle approval to Japan's Sumitomo Mitsui Banking Corporation to establish a wholly owned subsidiary in India. The approval allows SMBC to convert its four existing Indian branches in major cities into the subsidiary structure. The final banking license will be issued after the bank complies with all conditions set by the RBI. The decision considers factors like economic relations with Japan, financial soundness of the parent bank, and international regulatory standards.

Key Points: RBI Approves SMBC Japan for Wholly Owned Subsidiary in India

  • RBI grants in-principle approval
  • SMBC to convert Indian branches to subsidiary
  • Approval under 2025 foreign bank guidelines
  • Must meet home country regulatory conditions
2 min read

RBI gives approval to Japan's SMBC for setting up Wholly Owned Subsidiary in India

RBI grants in-principle approval to Japan's Sumitomo Mitsui Banking Corp to convert its Indian branches into a wholly owned subsidiary.

"The 'in-principle' approval has been granted to the bank for setting up a WOS through conversion of its existing branches in India - RBI"

Mumbai, January 14

The Reserve Bank of India has granted 'in-principle' approval to Sumitomo Mitsui Banking Corporation, Japan for setting up a Wholly Owned Subsidiary in India.

The approval comes under the Reserve Bank of India (Setting Up of Wholly Owned Subsidiaries by Foreign Banks) Guidelines, 2025.

SMBC is currently carrying on banking business in India in branch mode through its four branches located in New Delhi, Mumbai, Chennai and Bengaluru. The 'in-principle' approval has been granted to the bank for setting up a WOS through conversion of its existing branches in India, RBI said in a statement.

The RBI would consider granting a licence for commencement of banking business in WOS mode under Section 22 (1) of the Banking Regulation Act, 1949 to SMBC on being satisfied that the bank has complied with the requisite conditions laid down by RBI as part of 'in-principle' approval.

Notably, a foreign bank intending to establish a wholly owned subsidiary (WOS) in India must obtain prior approval from the regulator or supervisory authority in its home country. Such approval is a prerequisite for consideration of the application by the Reserve Bank of India (RBI).

As per the RBI guidelines, the applicant bank must also satisfy the RBI that it is subject to effective and adequate prudential supervision in its home jurisdiction, in accordance with internationally accepted supervisory standards. This includes being under consolidated supervision to ensure comprehensive oversight of the bank's global operations.

In assessing applications for the establishment of a WOS in India, the RBI will take into account a range of factors. These include the nature of economic and political relations between India and the country of incorporation of the parent bank, the extent of reciprocity extended by the home country to Indian banks, and the financial soundness and ownership structure of the parent bank.

Consideration will also be given to the international standing and home-country ranking of the bank by reputed agencies, its credit rating by internationally recognized rating agencies, its international presence, and the adequacy of its risk management framework and internal control systems.

- ANI

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Reader Comments

P
Priya S
Good move by RBI. It shows confidence in our economy. I just hope this leads to more job creation and not just a rebranding of their existing branches. The guidelines seem thorough, especially the part about reciprocity for our banks in their home country.
R
Rohit P
More foreign banks are welcome, but I have a small concern. Will they focus only on corporate and high-net-worth clients in metros, or will they also bring innovative products for the common man in tier 2 and 3 cities? That's the real test.
S
Sarah B
Working in finance in Mumbai, this is a significant development. SMBC is a major player. Their conversion to a WOS means they're here for the long haul and will be subject to full RBI supervision. This increases stability in the financial system.
V
Vikram M
The 'in-principle' approval is just the first step. The real work for SMBC starts now to meet all of RBI's conditions. Hope they bring some of that Japanese efficiency and technology to retail banking here. Our public sector banks could learn a thing or two.
K
Karthik V
Positive step for FDI. Japan has consistently been a reliable partner. However, I respectfully think the RBI must ensure a level playing field. Our own banks face many regulatory burdens; the same strict standards on lending and priority sectors must apply to this WOS.

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