Japan’s Sumitomo Mitsui Banking Corporation (SMBC) has told the Reserve Bank of India (RBI) that it plans to consolidate its India operations under Yes Bank by the end of financial year 2029. The proposed restructuring would bring the Japanese banking group’s Indian banking and non-banking businesses under a single institution, with Yes Bank expected to emerge as the central entity.
The plan follows discussions between senior SMBC executives and RBI officials, according to a Moneycontrol report published on November 12, 2026. The proposed consolidation is expected to take place in three stages, beginning with the operationalisation of SMBC’s wholly owned Indian banking subsidiary and followed by the integration of SMFG India Credit. The final stage would involve merging the subsidiary with Yes Bank by FY29.
SMBC’s Three-Stage Plan to Consolidate India Operations
SMBC’s proposed restructuring is designed to bring its different Indian financial businesses under one banking structure.
According to people familiar with the discussions cited by Moneycontrol, the group has presented RBI with a roadmap covering three stages.
| Stage | Proposed action | Target timeline |
|---|---|---|
| First | Operationalise SMBC’s wholly owned Indian banking subsidiary | End of FY27 |
| Second | Merge SMFG India Credit with SMBC’s Indian subsidiary | End of FY28 |
| Third | Merge SMBC’s Indian banking subsidiary with Yes Bank | End of FY29 |
The first stage involves completing the transition of SMBC’s existing Indian branches into a locally incorporated wholly owned subsidiary.
The second stage would bring SMFG India Credit, the group’s non-banking financial company (NBFC), into the same structure.
The final stage would combine SMBC’s Indian banking subsidiary with Yes Bank. Since Yes Bank is the larger banking institution, it is expected to be the acquiring entity in the proposed merger, according to an investment banker quoted in the report.
However, the final structure, valuation and transaction details have not yet been established. The roadmap represents the group’s proposed plan rather than a completed or formally approved merger.
RBI Already Granted SMBC Approval to Establish an Indian Subsidiary
An important step towards the consolidation was completed in January 2026, when the RBI granted SMBC in-principle approval to establish a wholly owned subsidiary in India.
Until then, SMBC had operated its Indian banking business through branches in New Delhi, Mumbai, Chennai and Bengaluru.
The approval allows the Japanese lender to convert its existing branch operations into a locally incorporated banking entity, subject to fulfilling the conditions specified by the central bank.
A wholly owned subsidiary operates as a separate legal entity in India. Compared with the foreign-bank branch model, it provides greater operational flexibility and allows the institution to function more like a domestic bank.
The approval was only an in-principle clearance. SMBC must satisfy the RBI’s requirements and obtain the necessary licence before commencing banking operations through the new subsidiary.
The group is targeting completion of this process by March 2027.
SMBC’s 24.99% Stake in Yes Bank Makes the Merger Significant
SMBC already has a substantial presence in Yes Bank.
In 2025, the Japanese lender acquired approximately 24.99% of Yes Bank, becoming its largest shareholder. The transaction involved purchasing shares from the State Bank of India and other investor banks that had supported Yes Bank during its 2020 reconstruction.
The investment was worth approximately ₹13,482 crore.
The acquisition marked a major development in Yes Bank’s ownership structure. SBI, which had led the rescue effort in 2020, reduced its holding, while SMBC became the bank’s largest shareholder.
SMBC also secured representation on Yes Bank’s board through nominee directors, strengthening its participation in the lender’s governance.
The proposed consolidation could take this relationship further by combining the Japanese group’s separate Indian banking operations with Yes Bank.
However, its existing 24.99% holding does not mean SMBC already controls the bank. Any future change in ownership or control would remain subject to applicable banking regulations, securities rules and regulatory approvals.
SMFG India Credit Could Be Merged Before Yes Bank Integration
Another important part of the restructuring involves SMFG India Credit, the group’s Indian NBFC.
The company was previously known as Fullerton India Credit. Sumitomo Mitsui Financial Group (SMFG), SMBC’s parent company, acquired a majority stake in the lender in 2021 and subsequently completed its acquisition of the remaining stake.
SMFG India Credit has built a significant lending business in India, focusing on retail customers, small businesses and other segments.
Its operations are separate from SMBC’s banking business and Yes Bank.
Under the proposed roadmap, SMFG India Credit would first be merged with SMBC’s newly operational Indian banking subsidiary by the end of FY28.
This would bring the group’s banking and non-banking lending activities into a single structure before the final integration with Yes Bank.
The proposed sequence is important because the group needs to address the regulatory and structural implications of operating multiple banking entities in India.
An investment banker quoted by Moneycontrol said that once the NBFC is merged with SMBC’s wholly owned banking subsidiary, the group would need to address the issue of holding two banking licences. With Yes Bank being the larger banking entity, it is expected to be the acquirer in the final stage.
The precise legal and regulatory structure, however, remains subject to further work.
Supreme Court’s AT-1 Bond Verdict Accelerates the Consolidation Plan
The proposed restructuring has gained urgency following the Supreme Court’s October 15, 2026, judgment concerning Yes Bank’s Additional Tier-1 (AT-1) bonds.
The dispute relates to the bank’s decision to write off ₹8,415 crore worth of AT-1 bonds during its reconstruction in March 2020.
The Supreme Court upheld the Bombay High Court’s decision to set aside the write-off, ruling that the administrator appointed during the reconstruction process did not have the authority to write down the bonds under the final reconstruction scheme.
The ruling has implications for Yes Bank’s capital position because it restores bondholders’ claims against the bank.
According to Yes Bank’s pro forma financial figures for Q2 FY27, the impact could reduce its Common Equity Tier-1 (CET1) capital ratio by approximately 230–250 basis points.
That would bring the ratio down from 13.7% to around 11.4%.
CET1 is a key measure of a bank’s ability to absorb financial losses using its highest-quality capital. A lower ratio can reduce the buffer available to withstand unexpected losses and support future lending growth.
The Supreme Court also clarified that annual coupon payments on the bonds would remain payable according to the terms of the relevant information memoranda.
According to sources cited by Moneycontrol, SMBC had previously considered consolidating its Indian financial operations around FY30 or FY31. The timeline has now been brought forward to FY29.
Fresh Capital Infusion Into Yes Bank Is Also Possible
The proposed restructuring could involve additional capital being invested by SMBC into Yes Bank.
However, the amount and structure of any potential investment have not been finalised.
The timing and valuation of the different businesses will be important in determining how the transaction is structured. SMFG India Credit, SMBC’s banking subsidiary and Yes Bank would each need to be assessed before the proposed merger can be completed.
An investment banker cited by Moneycontrol indicated that greater clarity could emerge around the middle of FY28.
A fresh capital infusion could help Yes Bank strengthen its capital position, particularly in light of the AT-1 bond judgment. It could also provide additional resources to support lending and business expansion.
However, the extent to which SMBC participates in a capital raise will depend on regulatory requirements, the bank’s financial position and the final terms of the restructuring.
What the Consolidation Could Mean for Yes Bank
The proposed integration could reshape Yes Bank’s long-term position in India’s banking sector.
SMBC is one of Japan’s largest banking institutions and has a significant international presence. Its involvement could provide Yes Bank with access to global banking expertise, corporate relationships and cross-border business opportunities.
The integration of SMFG India Credit could also expand the group’s lending capabilities across retail and small-business segments.
For Yes Bank, the potential benefits include:
- Stronger institutional backing: SMBC’s financial strength and international banking experience could support the lender’s next phase of growth.
- Broader lending capabilities: Integration with SMFG India Credit could expand access to retail and small-business lending segments.
- Operational consolidation: Bringing separate entities together could simplify the group’s Indian business structure.
- Cross-border opportunities: SMBC’s international network could help Yes Bank serve Japanese and other multinational companies operating in India.
- Potential capital support: A future investment could strengthen Yes Bank’s capital position, subject to the final transaction structure.
However, integration would also involve challenges, including regulatory approvals, valuation differences, technology integration, management responsibilities and the alignment of different business models.
The Bigger Picture
SMBC’s proposed consolidation reflects the growing interest of major international financial groups in India’s banking market. Rather than operating through several separate entities, the Japanese group appears to be moving towards a unified structure centred on an established Indian private-sector bank. The strategy could help it combine global banking capabilities with local lending operations and a wider customer base.
For Yes Bank, the development could mark another important stage in its recovery following the 2020 reconstruction. However, the proposed merger is not yet a completed transaction, and the AT-1 bond judgment has introduced additional uncertainty around its capital position. The eventual outcome will depend on regulatory clearances, valuations, capital requirements and the ability of the institutions to integrate their operations successfully.
Looking Ahead
SMBC is targeting the end of FY29 to bring its Indian financial operations under Yes Bank through a three-stage restructuring process. The immediate priority is to operationalise its wholly owned Indian banking subsidiary by March 2027, followed by the proposed integration of SMFG India Credit by FY28. The final merger with Yes Bank would complete the group’s planned consolidation, although the detailed transaction structure and valuation remain undecided.
For investors, the key developments to monitor will be the RBI’s approval for SMBC’s subsidiary, the impact of the AT-1 bond judgment on Yes Bank’s capital position and any announcement regarding fresh capital investment. If completed successfully, the consolidation could strengthen Yes Bank’s institutional backing and expand its business capabilities. Until then, the FY29 timeline should be viewed as a proposed roadmap rather than a guaranteed completion date.
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