10:45 AM IST – The Reserve Bank of India (RBI) has granted in-principle approval to Sumitomo Mitsui Banking Corporation (SMBC), Japan, to set up a Wholly Owned Subsidiary (WOS) in India. The decision was announced through an official RBI press release issued in January 2026, under the RBI (Setting Up of Wholly Owned Subsidiaries by Foreign Banks) Guidelines, 2025.
What exactly has the RBI approved
As per RBI data, SMBC is currently operating in India through four branches located in New Delhi, Mumbai, Chennai, and Bengaluru. The in-principle approval allows the bank to convert these four branches into a single locally incorporated banking entity.
The RBI has clearly stated that the final licence to start banking business in WOS mode will be issued under Section 22(1) of the Banking Regulation Act, 1949, only after SMBC fulfils all regulatory, governance, and capital-related conditions set by the central bank.
How big is SMBC at the global level
SMBC is the main banking arm of Sumitomo Mitsui Financial Group (SMFG). As per global banking rankings:
- SMFG ranks among the top 25 largest banks in the world
- Market capitalisation stands at around $132.76 billion
- The group is one of the three largest banking groups in Japan
This means the bank receiving RBI approval is larger than many well-known private banks in India, even though most Indians may not recognise the name.
Why is SMBC not known to common customers
SMBC does not operate like regular banks seen on high streets.
- It does not open savings or current accounts for individuals
- It does not offer UPI, ATM cards, or personal loans
- It does not advertise on television or social media
The bank focuses only on large companies and high-value transactions, which keeps it away from public attention.
What business SMBC does in India
According to available banking and regulatory information, SMBC’s India operations are mainly linked to:
- Corporate loans running into thousands of crores
- Infrastructure, power, and industrial projects
- Trade finance between Indian and Japanese companies
- Foreign exchange and cross-border funding
Because of this model, the bank operates with limited branches but high transaction value.
Why does RBI prefer WOS over the branch model
RBI has been encouraging foreign banks to move to the WOS structure because:
- Capital stays within India
- RBI gets better control and supervision
- Risks during global financial stress are reduced
- Indian banking system becomes more stable
A WOS structure also shows that the foreign bank is planning to stay invested in India for the long term, instead of operating on a short-term or limited basis.
Why is this approval important
From a broader financial view, this approval shows that large global banks continue to see India as a safe and growing market. While the decision does not change day-to-day banking for common customers, it supports large projects, investment activity, and long-term economic growth.
For the Indian banking system, the entry of a globally ranked bank in WOS form strengthens institutional finance and aligns with the RBI’s focus on stability, compliance, and controlled expansion of foreign banks in the country.
