The calmness of Yes Bank’s managing director and CEO Prashant Kumar is probably what the financial institution has needed most since it’s near-death experience in early 2020. A reconstruction scheme from the Reserve Bank of India (RBI), recapitalisation from top banks and a clean-up of bad loans, all helped Yes Bank regain investor confidence and rebuild the trust deficit it was battling.
Now, as some of the existing banks such as State Bank of India (SBI), HDFC Bank and ICICI Bank, and other lenders have partly sold their stakes in Yes Bank to the new investor, Sumitomo Mitsui Banking Corporation (SMBC)—which is now the largest shareholder in Yes Bank with a 24.22 percent stake—a new chapter beckons India’s sixth largest bank by asset size.
Rajeev Veeravalli Kannan, managing executive officer, head of India division, Sumitomo Mitsui Banking Corporation (SMBC), joined the Yes Bank board, along with colleague Shinichiro Nishino, as non-executive and non-independent directors in the September-ended quarter. SBI, which still holds a 10.8 percent stake in Yes Bank, will continue to have one representative on its board.
In an exclusive interview with Forbes India, during an India visit in October, Kannan says that after capital infusion from a consortium of local banks, led by SBI, “we knew there was stability and the clean-up has been done in the platform. But importantly, we felt there is a pathway for us to contribute meaningfully for its next phase of growth”.
He adds that the intention of SBI and the other banks was to help Yes Bank stabilise and they were not expected to be permanent capital. “The markets were looking for a strategic shareholder who could provide permanent capital,” Kannan says. SMBC emerged as the strategic investor.
Historically, no foreign bank had picked up such a large stake in an Indian bank, barring Singapore-based DBS Bank, which acquired and merged the troubled Lakshmi Vilas Bank into its DBS India subsidiary. Now, a few weeks since the SMBC-Yes Bank deal, Dubai-based Emirates NBD Bank has approved plans to take a controlling stake in India’s RBL Bank.
SMBC initially paid about ₹13,480 crore to acquire a 20 percent stake in Yes Bank, followed by an additional ₹2,900 crore for a 4.2 percent stake sale from an affiliate of Carlyle Group in Yes Bank. In terms of capitalisation, Yes Bank has a Common Equity Tier 1 (CET1) ratio of 13.9 percent.
By 2018-19, the bank was speeding without brakes and the Reserve Bank of India (RBI), was concerned about this. The governance and leadership of Yes Bank’s then promoter Rana Kapoor (see shareholding pattern) was under scrutiny and the RBI declined to offer Kapoor an extension to his term. He exited his post in early 2019.By March 2020, when Kumar, the former deputy managing director at SBI, took charge of the bank as its CEO, the gross non-performing assets (GNPAs) for Yes Bank had surged to 16.8 percent as a portion of its total advances, double the level of all banks in India.
Yes Bank restructured its bad loans book by transferring ₹48,000 crore of its stressed assets loan portfolio to an asset reconstruction company (ARC) set up by Yes Bank and JC Flowers. The portfolio was purchased for ₹11,200 crore on a 15:85 basis, which meant that Yes Bank was paid 15 percent in cash upfront and the balance in the form of security receipts. The bank has received gross redemption from security receipts of ₹7,253 crore so far, since the deal was signed, based on Yes Bank’s investor presentation data.
Yes Bank’s GNPA is now down to 1.6 percent of gross advances and net NPAs are at 0.3 percent. Yes Bank reported an 18.3 percent rise in net profit to ₹654.47 crore, while net interest income rose 4.6 percent year-on-year to ₹2,300 crore and net interest margin rose to 2.5 percent, 10 basis points up year-on-year. Kannan says Yes Bank is “still in a journey” towards recovery.
What excited SMBC about Yes Bank was the opportunity. “There are not many times one can be a significant shareholder of a large bank. The scale is already there and there is an opportunity to scale up more,” he says.
Yes Bank is India’s sixth largest private lender by asset size with ₹4.29 lakh crore as of FY25, and 1,200 branches. It has been profitable for 11 successive quarters, since March 2023.
“Through the rebuilding journey, Yes Bank has the ability to build on wholesale, corporate banking, SME and retail… in each of them there is more work to be done. We have to contribute meaningfully in those areas,” Kannan says.
Also Read: Will Yes Bank leapfrog led by Japan's SMBC investment?
Kannan adds that they were not looking at a return on equity (RoE) over 2-3 years. “But short-term performance is important and we have to meet the expectation of the markets.”
Though SMBC in India has significant relationships with Japanese multinationals, it was getting limited with just four bank branches in India: New Delhi, Mumbai, Chennai and an offshore branch in GIFT city.Since SMBC wants to support its clients coming into India—from a trade and investment perspective—the Yes Bank presence means they will be able to collaborate with the bank and provide additional financial services, or Yes Bank can use their digital capabilities to support them.
SMBC has a rich experience of operating in India through its non-banking financial company (NBFC) SMBC Credit. SMBC Credit, which has 829 branches across India, offers personal loans, working capital loans, SME financing and two-wheeler loans. “There could be a collaboration of Yes Bank with SMBC Credit on the priority sector lending book,” Kannan says. There could also be plans to bring Olive, SMBC’s integrated financial services banking for retail customers, to Yes Bank.
Prashant Kumar had earlier spoken about expanding towards wealth management, wholesale banking, SME and retail banking as growing opportunities for Yes Bank.
Obviously, SMBC wants Yes Bank to reduce its costs of funds, improve their CASA (current and savings accounts) ratio and scale up profitability (see opportunities).
There is no doubt that India is one of the most important nations for the SMBC Group, outside of Japan, being a country-specific—rather than a regional—revenue generator. It also has ex-Niti Aayog CEO Amitabh Kant as an advisor.
The coming months and years will reveal the strategies SMBC India has outlined for Yes Bank. Opportunities and challenges are equally well outlined. Now is the time for execution.
First Published: Nov 10, 2025, 12:05
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