RBI Grants In-Principle Approval to SMBC for Wholly Owned India Subsidiary

The Reserve Bank of India has granted in-principle approval to Japan-based Sumitomo Mitsui Banking Corporation to set up a wholly owned subsidiary (WOS) in India. The approval was announced on January 14, 2026,  and has been issued under the Reserve Bank of India (Setting Up of Wholly Owned Subsidiaries by Foreign Banks) Guidelines, 2025. 

The central bank stated that it would consider granting a licence for the commencement of banking operations once the bank fulfils the conditions attached to the in-principle approval, as required under Section 22(1) of the Banking Regulation Act, 1949. 

Conversion Of Existing Branches 

SMBC currently operates in India through 4 branches located in New Delhi, Mumbai, Chennai and Bengaluru. The proposed subsidiary will be established through the conversion of these existing branches into a locally incorporated entity. 

A wholly owned subsidiary operates as a separate legal entity in India. This structure allows foreign banks treatment closer to domestic lenders, including fewer restrictions on branch expansion, while ensuring that the subsidiary’s capital remains ring-fenced from the parent bank. 

Foreign Banks Operating in India 

Under current regulations, foreign banks are permitted to operate in India either through branch mode or as wholly owned subsidiaries. At present, DBS Bank India and SBM Bank India operate as WOS entities. With this approval, SMBC will become the fourth foreign lender to move to the subsidiary model. 

According to the RBI’s Trends and Progress report, the number of foreign banks operating in India declined to 44 as of March 31, 2025. At the end of the financial year, there were 775 foreign bank branches and 31 representative offices in the country. 

Link With Yes Bank Stake 

The approval comes months after SMBC acquired a 24.22% stake in Yes Bank for ₹13,482 crore, making it the largest shareholder in the private sector lender. Following the transaction, State Bank of India’s holding in Yes Bank was diluted to 10.78%. 

Yes Bank had undergone a reconstruction process in March 2020, led by SBI and other lenders, which together acquired a 79% stake to stabilise the bank. 

Read More: India Draws $51 Billion FDI in 6 Months as Manufacturing, Startups Gain Ground! 

Conclusion 

The in-principle approval allows SMBC to transition from a branch-based presence to a locally incorporated banking subsidiary in India, subject to regulatory conditions being met. 

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.   
 
Investments in the securities market are subject to market risks, read all the related documents carefully before investing.