Sumitomo Mitsui Banking Corporation (SMBC) has taken a significant step towards increasing its stake in Yes Bank , a move that could potentially inject substantial capital into the Indian lender. The Japanese banking giant has applied to the Reserve Bank of India (RBI) for approval to acquire up to a 25% stake in Yes Bank.

Separate from Previous Agreement

This latest application is distinct from SMBC's earlier agreement to purchase a 20% stake from a group of Indian banks. The new application, if approved, would allow SMBC to further increase its investment in Yes Bank.

Potential Investment

If the RBI grants approval for this additional stake acquisition, SMBC could potentially invest an additional $1.10 billion in Yes Bank. This substantial investment would significantly bolster Yes Bank's capital position and potentially support its growth strategies.

Regulatory Approval Pending

It's important to note that this potential stake increase is subject to regulatory approval from the RBI. The central bank will review SMBC's application and make a decision based on various factors, including the impact on Yes Bank's ownership structure and the broader banking sector.

Implications for Yes Bank

While the outcome of SMBC's application remains to be seen, the potential for increased investment from a major international banking player could have significant implications for Yes Bank. It may enhance the bank's financial stability, improve its market position, and potentially lead to strategic collaborations between the two institutions.

As this situation develops, stakeholders will be closely watching for the RBI's decision and its potential impact on Yes Bank's future trajectory in the Indian banking landscape.

Yes Bank , one of India's leading private sector banks, is poised for a significant boost as Sumitomo Mitsui Financial Group (SMFG) plans to invest an additional $1.1 billion in the institution. This development comes alongside an upgrade in the bank's credit ratings, signaling a positive outlook for its financial stability and growth prospects.

SMFG's Strategic Investment

SMFG is reportedly planning to invest an additional $1.1 billion in Yes Bank. This investment includes:

• Acquiring a 5% stake from Carlyle Group and others
• Potentially purchasing $680 million in convertible bonds

If completed, SMFG's total stake in Yes Bank would increase to about 25%. The news of this potential investment led to a 3.3% rally in Yes Bank's shares.

Credit Rating Upgrade

ICRA, a prominent credit rating agency, has upgraded Yes Bank's ratings for several financial instruments:

• Infrastructure Bonds and Basel III Tier II Bonds: Upgraded to [ICRA]AA- (Stable) from [ICRA]A (Positive)
• Basel III Tier I Bonds: Reaffirmed at [ICRA]D (These instruments were previously written down as part of the restructuring of liabilities)

The rating upgrade reflects Yes Bank's improving financial health and operational performance. ICRA cited several factors contributing to this positive assessment:

1. Steady increase in the bank's scale of operations
2. Improving mix of the loan book with a growing share of granular loans
3. Continued decline in the stressed assets pool
4. Stable earnings and capital position
5. Steady recoveries from security receipts (SRs)

Key Financial Indicators

Yes Bank has shown improvement in several key areas:

• Loan Book Growth: 8% year-on-year growth
• Deposit Base Growth: 7% year-on-year increase

Future Outlook

The planned stake acquisition by Sumitomo Mitsui Banking Corporation (SMBC), which is set to become the single largest shareholder pending regulatory approvals, is expected to further strengthen Yes Bank's position in the market.

ICRA maintains a stable outlook for Yes Bank, anticipating that the bank will maintain a steady credit profile while scaling up operations and improving profitability metrics. However, the agency notes that the impending judgment of the Supreme Court regarding the potential writeback of Additional Tier-1 (AT-1) bonds remains a key factor to monitor.

As Yes Bank continues to focus on improving its core operating profitability and asset quality, the combination of SMFG's planned investment and the credit rating upgrade positions the bank for potentially stronger performance in the coming years.

Note: All financial figures are based on data as of March 31, 2025, as reported in the ICRA credit rating update.