Foreign lenders lured by rare stake sales in India banks, but tighter rules weigh

Deals in the banking sector are uncommon in India, particularly when they involve international businesses.

The last significant acquisition occurred in 2020 when Singapore-based DBS Group fully acquired struggling Indian lender Lakshmi Vilas Bank in a move prompted by regulations.

As current investors in Yes Bank and IDBI Bank open fresh tabs to sell their holdings, international banks have a unique opportunity to acquire majority stakes in a market controlled by state-owned banks.

Emirates NBD and Sumitomo Mitsui Banking Corp (SMBC) of Japan have expressed interest in purchasing a 51% holding in the private sector lender Yes Bank, from which its shareholders wish to divest.

The economy of India is expected to grow by 7.2% this year, which is why international investors are showing interest in both banks.

Indian regulations mandate that the promoter, who holds the highest stock in a local bank, must reduce their holding to 26% throughout a 15-year period.