- Reserve Bank of India approved SMBC to set up a wholly-owned subsidiary in India
- SMBC currently operates in India through four branches in major cities
- The subsidiary will allow SMBC to open branches without restrictions locally
The Reserve Bank of India on Wednesday granted ‘in-principle' approval to Japanese financial services giant Sumitomo Mitsui Banking Corp. for setting up a wholly-owned subsidiary in India, allowing it greater flexibility in its operations.
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," the 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, the notice added.
A wholly-owned subsidiary is a separate legal entity in India that allows a bank treatment similar to local lenders, including freedom to open branches without restriction. Such a subsidiary's capital is ring-fenced from the parent bank's.
Last year, SMBC acquired a minority stake stake in Yes Bank Ltd.
The Japanese lender received the RBI approval to acquire the stake in August. The central bank decided that SMBC would not be treated as a "promoter" of Yes Bank following the deal, which would have involved additional regulatory requirements.
SMBC is one of the largest Japanese banks by assets, with over 243,825 billion yen in total assets and strong credit ratings across our global integrated network spanning 39 countries and territories, 15 of which are here in the region.
Sumitomo Mitsui Financial Group is a global banking and financial services groups, offering commercial banking, leasing, securities, and consumer finance. It is listed on the Tokyo and New York stock exchanges and is recognised as a global systemically important bank.
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