The proposed stake sale of Yes Bank has encountered a significant hurdle as the Reserve Bank of India (RBI) is hesitant to allow a foreign financial institution to acquire a majority stake, according to a source familiar with the situation. Initial reports had suggested that the stake sale would be completed by the last quarter of FY25.
Japanese lender Sumitomo Mitsui Banking Corporation (SMBC) and Dubai-based Emirates NBD have both expressed strong interest in acquiring over 51% of Yes Bank. SMBC, a subsidiary of Sumitomo Mitsui Financial Group, Japan’s second-largest bank, has reportedly been in direct negotiations with the RBI. However, the central bank remains firm on its stance against majority foreign ownership, especially in light of India’s banking regulations.
Both bidders are reportedly seeking to secure a 51% stake in Yes Bank with the intention of holding it indefinitely. However, according to Indian banking licensing norms, promoters are required to reduce their stake to 26% within 15 years of starting operations. This regulation has led to a standoff between the interested foreign institutions and the regulator.
The uncertainty surrounding RBI’s approval has also affected decision-making at State Bank of India (SBI), which holds a significant stake in Yes Bank. Sources say that SBI’s board has not yet reviewed the stake sale proposal due to the lack of clarity on the timeline and regulatory approval. Until there is more certainty on whether RBI will ease its restrictions, the future of Yes Bank’s stake sale remains in limbo.
