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RBI Approves Japan's SMBC to Set Up Wholly-Owned Indian Banking Subsidiary

The Reserve Bank of India has granted in-principle approval for Japan's Sumitomo Mitsui Banking Corp to establish a wholly-owned subsidiary in India. This move will allow SMBC to convert its existing four branches in major cities into a locally incorporated entity. The new structure grants the bank greater operational flexibility and treatment on par with domestic banks, while ring-fencing its capital. This step advances SMBC's expansion strategy, following its acquisition of a stake in Yes Bank in 2024.

Key Points: RBI Grants In-Principle Nod to Japan's SMBC for Indian Subsidiary

  • SMBC to convert branches to subsidiary
  • Gains operational parity with domestic banks
  • Capital ring-fenced from parent company
  • Follows 2024 stake in Yes Bank
  • Supports long-term India strategy
2 min read

RBI gives in-principle nod to Japan's SMBC to set up wholly-owned subsidiary in India

RBI approves SMBC to convert its Indian branches into a wholly-owned subsidiary, boosting operational flexibility and its long-term strategy in India.

RBI gives in-principle nod to Japan's SMBC to set up wholly-owned subsidiary in India
"RBI has decided to grant 'in-principle' approval to SMBC, Japan for setting up a Wholly Owned Subsidiary (WOS) in India - Reserve Bank of India"

Mumbai, Jan 14

India's central bank on Wednesday announced that it has given in-principle approval to Japan's Sumitomo Mitsui Banking Corp to set up a wholly owned subsidiary in the country -- marking an important step in the bank's expansion plans in the Indian market.

In a statement, the Reserve Bank of India said the approval allows SMBC to move from its current branch-based operations to a locally incorporated subsidiary.

Until now, the Japanese lender has been operating in India through a branch.

"RBI has decided to grant 'in-principle' approval to SMBC, Japan for setting up a Wholly Owned Subsidiary (WOS) in India," the central bank said in the statement.

Setting up a wholly owned subsidiary will give SMBC greater operational flexibility in India.

As a locally incorporated entity, the bank will be treated on par with domestic banks, including the ability to open branches more freely without the restrictions that apply to foreign bank branches.

"SMBC is currently carrying on banking business in India in branch mode through its four branches located in New Delhi, Mumbai, Chennai and Bengaluru," it added.

The structure also ensures that the subsidiary's capital remains ring-fenced from its parent, helping protect the Indian financial system from external shocks.

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

SMBC already has a growing presence in India. In 2024, the bank acquired a 24 per cent stake in Yes Bank, strengthening its footprint in the country's banking sector.

The move to set up a wholly owned subsidiary is expected to further support SMBC's long-term strategy in India, one of the world's fastest-growing major economies.

"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," the central bank mentioned.

- IANS

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Reader Comments

P
Priya S
Interesting. They already have a stake in Yes Bank. Now a full subsidiary. SMBC is clearly betting big on India's growth story. Hope this brings in more Japanese investment and technology into our financial sector.
R
Rohit P
The ring-fencing of capital is the most important part. Protects our system if there's trouble in Japan. RBI is being smart about this. We need foreign banks, but on our terms.
S
Sarah B
While welcoming foreign investment is good, I hope RBI ensures strict compliance with local regulations. Sometimes foreign subsidiaries can be complex. The 'in-principle' approval is just the first step; the real test is in the implementation and oversight.
V
Vikram M
More banks mean more job opportunities for finance grads in Mumbai, Delhi, Bangalore. That's always a good thing. Hope they expand to more cities soon.
K
Karthik V
Japan has been a reliable partner for India. From bullet trains to banking. This strengthens economic ties. Bhagwan ji, bas yeh accha kaam karein customers ke liye, varna humare yahaan toh SBI hi kaafi hai! 😄

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