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SMBC Strengthens Stake with ₹16,000 Crore Investment in Yes Bank
Banking, business update, Equities, Markets - August 30, 2025

SMBC Strengthens Stake with ₹16,000 Crore Investment in Yes Bank

SMBC Strengthens Stake with ₹16,000 Crore Investment in Yes Bank

Sumitomo Mitsui Banking Corporation (SMBC), Japan’s banking major, is poised to strengthen its partnership with Yes Bank through an infusion of ₹16,000 crore in equity and debt financing.

Strategic Boost for Yes Bank’s Financial Health
Sumitomo Mitsui Banking Corporation (SMBC), Japan’s third-largest lender, is preparing to infuse an additional ₹16,000 crore into Yes Bank. This latest capital infusion, structured through yen-denominated bonds and equity instruments including foreign currency convertible bonds (FCCBs), is anticipated to significantly strengthen Yes Bank’s balance sheet and improve overall financial metrics.
The ₹16,000 crore further investment follows SMBC’s earlier acquisition of a 20% stake in Yes Bank for ₹13,500 crore, primarily acquired from existing shareholders led by the State Bank of India (SBI). SMBC has secured regulatory approval from the Reserve Bank of India (RBI) to hold up to 24.99% equity, with plans to explore strategies to raise this stake by 4.99% in coming months.

Investment Breakdown and Structure
The capital injection is split into two parts:
• ₹8,500 crore through long-term, yen-denominated bonds carrying sub-2% rates, offering Yes Bank access to low-cost capital.
• ₹7,500 crore through equity infusion, most likely in the form of FCCBs, boosting the bank’s capital adequacy and enabling growth lending.
This structured funding approach not only tightens Yes Bank’s liquidity but also optimizes the cost of capital, which will enable more competitive lending and expansion.

SMBC’s Plans for a Larger Role
The bank is also establishing a wholly owned subsidiary in India, intended as a platform for potential majority ownership in the future. Recent negotiations with private equity investors Advent International and Carlyle Group—holders of approximately 9.2% and 4.2% stakes, respectively—are ongoing to facilitate the increase in SMBC’s holding.
While RBI has yet to grant promoter status, SMBC’s keen interest in formalizing this status signals a robust long-term commitment to shaping Yes Bank’s growth narrative in the competitive banking sector.

Positive Market Reception and Outlook
News of SMBC’s additional ₹16,000 crore investment led to immediate market enthusiasm, with Yes Bank’s shares surging around 4% on BSE following the announcement. Investors view the move as bolstering the bank’s financial position, which is crucial given Yes Bank’s position as a private sector challenger bank in India.
The fresh infusion of capital is expected to lift Yes Bank’s net interest margin (NIM), which stood at just 2.5% in June 2025—one of the lowest in the industry.
Better capital adequacy could enable the bank to lend more aggressively while sustaining profitability.

Yes Bank’s Evolution and Growth Prospects
Yes Bank has undergone significant transformation since the 2020 bailout led by the Reserve Bank of India and major lenders like SBI. SMBC’s involvement marks an important chapter, bringing in international expertise and financial muscle to support the private lender’s ambitions.
With this infusion, Yes Bank is well-positioned to scale its loan book, invest in digital banking capabilities, and strengthen its presence in corporate, retail, and MSME banking sectors. SMBC’s strategic partnership is expected to provide the bank with access to global best practices, governance frameworks, and new business opportunities.

Concluding Perspectives
SMBC’s planned ₹16,000 crore investment is a pivotal moment for both the Japanese banking giant and Yes Bank. It underlines SMBC’s growing confidence in India’s private banking sector and its aspirations for a larger footprint. For Yes Bank, this strategic capital boost secures a stronger capital base, setting the stage for accelerated growth and enhanced competitiveness.
Pending regulatory approvals and successful stakeholder negotiations, this partnership could redefine Yes Bank’s future trajectory as a robust, technology-driven, and globally connected bank.

 

 

 

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RBI's Revised Co-Lending Norms Set to Transform NBFC Growth
Banking, Equities, Markets - August 18, 2025

RBI's Revised Co-Lending Norms Set to Transform NBFC Growth

RBI’s Revised Co-Lending Norms Set to Transform NBFC Growth

Major regulatory reforms empower joint lending, expand credit access, and boost risk sharing among financial institutions in India.

Introduction
The Reserve Bank of India (RBI) has introduced its landmark Co-Lending Directions, 2025, set to take effect from January 1, 2026. These new norms are poised to radically reshape the lending landscape for Non-Banking Financial Companies (NBFCs) by fostering collaboration between banks, NBFCs, and other regulated entities (REs). Industry experts, including rating agency Crisil, anticipate the measures will unlock significant growth opportunities and help overcome longstanding funding constraints that have troubled smaller lenders.

Key Highlights of the RBI Co-Lending Guidelines
1. Minimum Loan Retention Requirement
As per the revised framework, each participating RE—whether a bank or an NBFC—must retain a minimum of 10% of every individual loan on its own balance sheet. This is a notable reduction from the previous minimum of 20%, particularly benefiting mid-sized and smaller NBFCs that face higher funding constraints. The measure ensures all partners have genuine financial exposure (“skin in the game”) and participate actively in risk management.
2. Expanded Applicability and Partnership Scope
Earlier, co-lending was primarily limited to priority sector loans. The revised norms extend the model to all regulated entities and all forms of loans (secured and unsecured), vastly expanding the scope of credit delivery in India. Banks, NBFCs (including housing finance companies), and other financial institutions can now collaborate in lending to retail and MSME segments, driving deeper financial inclusion.
3. Default Loss Guarantee Cap
Originating REs, which initiate the loan, may provide a direct lending guarantee (DLG) of up to 5% of the pooled loan amount to their co-lending partner. This guarantee absorbs losses in case of default and was previously restricted to digital lending. The guarantee must be invoked only after 90 days of delinquency, ensuring prudent risk and reward sharing between partners without excessive risk transfer.
4. Uniform Asset Classification
In a major regulatory step, all co-lending partners must follow a uniform asset classification for each loan. If one partner flags a loan as a special mention account (SMA) or non-performing asset (NPA), the other must do the same, with this data shared in real time. This removes regulatory arbitrage, ensures early stress recognition, and promotes transparency across the system.
5. Blended Interest Rates and Disclosure Norms
Borrowers will be charged a blended interest rate, calculated as the weighted average of each RE’s internal rate based on their share of the loan. All additional fees and charges must be disclosed upfront in the Key Facts Statement (KFS) and factored into the annual percentage rate (APR). Financial institutions are required to disclose details of their co-lending arrangements, volumes, interest rates, fees, sectoral exposure, and partner lists both online and in financial statements.
6. Operational Clarity and Borrower Protection
Every co-lending agreement must detail the loan product, partner duties, borrower selection criteria, fee structures, and risk-sharing models. All transactions are to be routed through escrow accounts to ensure fund security and transparency. Borrowers will have a single point of contact throughout the loan lifecycle, with grievance redressal mechanisms in place and clear product information.

Impact on NBFCs and Credit Growth
Lending Opportunities and AUM Expansion
The new rules enable NBFCs, especially smaller ones, to participate in co-lending with banks on more flexible terms, reducing the minimum loan retention requirement. This alleviates funding pressures, encouraging NBFCs to scale up lending operations. Crisil reports co-lending assets under management for NBFCs exceeded ₹1.1trillion as of March 2025, with robust growth expected after the new framework takes effect.
Financial Inclusion and Risk Distribution
Wider partnership possibilities mean loans can reach underserved consumer, SME, and rural markets—key to achieving financial inclusion. Risk is distributed more efficiently between large and small lenders, reducing systemic vulnerabilities and paving the way for more resilient financial sector growth.
Regulatory Oversight and Compliance
Greater oversight ensures all partners adhere to prudent risk management standards, with no scope for regulatory arbitrage. Real-time asset classification and disclosures will lead to early problem loan identification and protect stakeholders, including borrowers and investors.

Challenges and Industry Feedback
Technology Integration
Industry commentary highlights that integrating diverse technology platforms among co-lending partners could prove challenging. Implementing seamless data sharing, unified asset classification, and escrow arrangements will demand substantial investment and collaboration.
Need for Clarity
While the guidelines provide a robust framework, stakeholders have sought further clarity on fee structures, business continuity plans (especially for failed partnerships), and operational responsibilities to avoid confusion and ensure smooth implementation.

Conclusion
The RBI’s Co-Lending Directions, 2025 mark a significant milestone for India’s financial sector, particularly for NBFCs. By lowering barriers, broadening collaboration, tightening regulatory standards, and prioritizing borrower protection, the new framework is set to unlock NBFC growth and drive financial inclusion. With careful execution and continued regulatory oversight, the benefits for lenders and borrowers alike are expected to be substantial.

 

 

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Kore Digital Q1 FY2026 Results: Robust Growth Driven by Telecom Infrastructure Demand

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SBI Lowers Interest on Savings and Term Deposits
Banking - June 16, 2025

SBI Lowers Interest on Savings and Term Deposits

SBI Lowers Interest on Savings and Term Deposits

New Rates Take Effect June 15, Including Scheme Updates

India’s largest public sector lender, the *State Bank of India (SBI), has officially revised its interest rates on both **savings accounts and fixed deposits, with the changes coming into force from June 15, 2025. This move comes shortly after the Reserve Bank of India’s repo rate cut, prompting banks to adjust their deposit and lending rates accordingly.

Savings Interest Rate Hits New Low

SBI has brought down the interest rate on its savings bank account to 2.5%, now marking the lowest rate the bank has ever offered. This cut will affect both **existing account holders and new customers, and reflects the ongoing trend of softening deposit returns* following the central bank’s monetary policy easing earlier in the month.

Fixed Deposit Rates Slashed Across Tenures

In tandem with the reduction in savings rates, SBI has also trimmed its *fixed deposit (FD) rates by 25 basis points* for deposits up to ₹3 crore. This adjustment applies across *all maturity periods, impacting both fresh deposits and those being renewed. The bank is aligning its interest payout structure with the broader **liquidity environment and funding cost management* objectives.

Amrit Vrishti Scheme Now at 6.85%

SBI has also introduced changes to the Amrit Vrishti special fixed deposit scheme, adjusting the offered return to 6.85%, effective June 15, 2025. This revised rate will be applicable to both senior citizens and super senior citizens, without any differential treatment. The update is part of SBI’s regular efforts to restructure its deposit schemes in line with shifting financial market conditions and evolving customer expectations.

Impact on SBI Customers

These rate changes are likely to affect depositors’ earnings, especially for those who rely heavily on interest income from traditional banking instruments. Investors may now find themselves looking toward  alternative investment vehicles such as debt mutual funds, equity-linked products, or government bonds to compensate for reduced returns. Reviewing and diversifying portfolios will be important steps for individuals aiming to preserve their financial stability in a low-rate environment

Summary:
SBI just hit the brakes on your savings with a fresh rate cut—bringing savings interest to an all-time low and trimming FDs across the board. Even the once-glamorous Amrit Vrishti scheme isn’t spared, now capped at 6.85% for seniors. Translation? If you’re counting on bank interest to grow your money, it might be time to get a little more creative with your portfolio. Safe is fine, but smart is better.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Indian Rupee Trails Asian Currencies

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Kotak Mahindra Bank stock slips following Q4 earnings announcement.
Result Updates - May 5, 2025

Kotak Mahindra Bank stock slips following Q4 earnings announcement.

Kotak Mahindra Bank stock slips following Q4 earnings announcement.

 

 Kotak Mahindra Bank’s Q4 shortfall prompts analyst downgrades, fueling uncertainty over its future performance trajectory.

 Kotak Mahindra Bank Faces a Challenging Quarter

Kotak Mahindra Bank’s financial performance for the fourth quarter of FY2025 came as a surprise to investors, as the bank posted a notable decline in profits, falling short of analysts’ expectations. Following this disappointing result, the bank’s share price plummeted by more than 5%, triggering multiple downgrades from leading brokerages. The primary concerns stemmed from rising credit costs and a weaker loan growth outlook, leading to a re-evaluation of the stock’s investment potential.

Q4 Earnings Fall Short: Key Highlights

Kotak Mahindra Bank reported a 14% drop in standalone net profit for Q4 FY2025, which came in at ₹3,552 crore. Analysts had predicted a higher profit margin, but the actual results were marred by a significant increase in provisions for bad loans. This surge in provisions raised concerns about the bank’s asset quality and its ability to maintain profitability in the near term.
“Higher credit costs, driven by an increase in non-performing assets, have hurt Kotak Mahindra Bank’s earnings this quarter,” said a senior analyst from a leading brokerage firm.
Moreover, the bank’s revenue growth also came in weaker than expected, raising doubts about its ability to deliver strong loan growth going forward. These factors collectively contributed to the negative market reaction.

Analyst Downgrades and Revised Targets

Following Kotak Mahindra Bank’s underwhelming Q4 performance, multiple leading analysts have revised their outlook on the stock, opting for downgrades. Leading brokerages, including BofA Securities, Bernstein, and Nomura India, have revised their target prices for the bank, lowering their expectations based on the weaker outlook for loan growth and rising credit costs.
• BofA Securities lowered its price target for the bank from ₹2,100 to ₹1,900, citing concerns about profitability pressure.
• Bernstein shifted its stance from “Outperform” to “Market Perform,” reflecting a more reserved outlook for the short term.
• Nomura India also revised its price target downward, citing subdued credit growth and rising provisions.
The downgrades reflect widespread skepticism regarding the bank’s ability to maintain strong performance in the face of increasing competition and economic uncertainty.

Rising Credit Costs: A Major Concern

A key concern following Kotak Mahindra Bank’s Q4 results is the rising credit costs, which have been increasing due to a higher provisioning for bad loans. While the bank has managed to maintain a relatively low level of non-performing assets (NPAs) in the past, the surge in provisions suggests that the economic environment is starting to take a toll on asset quality.
“While the bank’s core operations remain robust, the higher-than-expected credit costs are likely to weigh on its profitability in the coming quarters,” noted a senior market strategist.
This is a crucial factor for investors to consider, as it suggests that Kotak Mahindra Bank may face challenges in maintaining its historical profitability, especially if economic conditions worsen or if the bank’s loan book becomes more vulnerable.

Weak Loan Growth Outlook

Another issue highlighted by analysts is the bank’s modest loan growth in the quarter, which has raised concerns about its future prospects. Kotak Mahindra Bank has traditionally relied on strong loan growth to drive its earnings, but with a weaker growth outlook, there are questions about the bank’s ability to sustain its current trajectory.
Analysts believe that the slower loan growth, combined with the rising credit costs, could result in lower-than-expected returns for investors. This is particularly concerning given the competitive nature of India’s banking sector, where other players are aggressively expanding their loan books.

Looking Forward: Can Kotak Mahindra Bank Recover?

While the immediate outlook for Kotak Mahindra Bank seems uncertain, the long-term picture is still relatively positive. The bank has a strong capital base, a diversified portfolio, and a solid reputation for financial discipline. However, it will need to address its rising credit costs and moderate loan growth to regain investor confidence.
Analysts also highlight the importance of macroeconomic factors in shaping the bank’s future performance. A stable economic environment, coupled with effective management of credit risks, could help Kotak Mahindra Bank navigate these challenges and return to growth.

Conclusion: Caution in the Short Term, Potential in the Long Run

In conclusion, Kotak Mahindra Bank’s Q4 earnings miss has sent ripples through the market, with downgrades and revised target prices reflecting a cautious short-term outlook. While credit costs and loan growth remain areas of concern, the bank’s strong fundamentals and management expertise provide a foundation for long-term growth. Investors should carefully monitor the bank’s progress in addressing these challenges and consider the stock’s potential once these issues are mitigated.

 

 

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Rupee Surges to 7-Month High at 83.78/USD Amid Strong Inflows, Trade Optimism

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Banking - May 2, 2025

Warburg Pincus Acquiries 10% Share in IDFC First Bank

Warburg Pincus Acquiries 10% Share in IDFC First Bank

A worldwide private equity firm has expressed its interest in acquiring a 10% share in IDFC First Bank by reaching out. This move signals growing foreign investor confidence in India’s private banking sector.

Summary:
It a global private equity company, has shown interest in buying a 10% stake in IDFC First Bank by getting in touch with the CCI. The strategic investment seeks to bolster the bank’s capital base and signifies renewed interest from global investors in India’s expanding banking and financial services landscape.

Warburg Pincus Eyes Slice of India’s Banking Future

A global private equity firm has indicated its interest in purchasing a 10% stake in IDFC First Bank by contacting the CCI. The proposed transaction comes as India’s banking industry is witnessing a surge in foreign interest, driven by robust financial performance, digital transformation, and a strengthening regulatory environment.
Though the financial specifics of the proposed deal have not been publicly disclosed, analysts anticipate the investment to fall within the ₹4,000–₹5,000 crore range based on IDFC First Bank’s current market capitalization.

Regulatory Nod: The First Step

The CCI nod is a crucial regulatory milestone without which the transaction cannot proceed. As per Indian laws, any acquisition that crosses specific asset or turnover thresholds must be cleared by the CCI to ensure the deal doesn’t harm market competition. In the case of banking and financial institutions, the CCI also examines the transaction’s impact on financial stability, credit access, and sectoral competitiveness.
In addition to CCI clearance, Warburg Pincus may also need approvals from the Reserve Bank of India (RBI), particularly if the stake exceeds the regulatory limits set for foreign investors in private banks. Under current norms, the RBI caps foreign direct investment (FDI) in private sector banks at 74%, with automatic approval up to 49%.

About Warburg Pincus

It is a prominent global private equity firm that oversees more than $80 billion in assets. It has a strong track record of investing in the financial services sector, particularly in emerging markets. In India, Warburg has previously backed firms like Kotak Mahindra, AU Small Finance Bank, HDFC, and Capital First, which merged with IDFC Bank in 2018 to create IDFC First Bank.
This history makes Warburg’s interest in IDFC First Bank a return to familiar territory and a continuation of its long-term bet on India’s evolving financial inclusion and retail lending story.

About IDFC First Bank: A Rising Contender

Under the leadership of V Vaidyanathan, the bank has made a significant shift towards retail banking, decreasing its reliance on corporate and infrastructure loans. This transition has contributed to enhanced asset quality and more consistent earnings.
As of FY24, IDFC First Bank has:
Over 46 million customers
Gross advances of over ₹2.3 lakh crore
A CASA ratio of around 50%, among the best in the industry
Net NPA below 1%, reflecting robust credit underwriting
The bank has also consistently improved profitability and digital adoption, positioning itself as a formidable challenger to traditional banking incumbents.

Strategic Significance of the Investment

  •  Capital Boost for Future Growth
    If the transaction goes through, the fresh capital injection will strengthen IDFC First Bank’s Tier-1 capital base, enabling it to expand its loan book, enhance digital infrastructure, and prepare for future regulatory requirements such as Basel III norms.
  •  Investor Confidence in Indian Banking
    The move highlights how India’s private banking sector continues to attract long-term, patient capital. Despite global macroeconomic uncertainties, India’s growing middle class, digital banking revolution, and pro-reform stance have made its financial sector a lucrative investment ground.
  •  Warburg’s Strategic Play
    For Warburg Pincus, this deal is not just a financial investment—it’s a strategic foothold in a high-growth, digitally agile bank. With a history of nurturing financial services companies into market leaders, Warburg could bring global best practices, corporate governance support, and long-term strategic value.

Sector-Wide Ripple Effects

The news of the stake acquisition proposal is expected to create ripple effects across the Indian banking and private equity ecosystem:
Private sector banks, especially mid-sized ones, may see heightened global funds’ interest in high-growth stories.
Banking sector valuations could increase as demand from long-term investors like Warburg increases.
The transaction may also boost IDFC First Bank’s share price, subject to deal valuation and subsequent market response.

What Comes Next?

Warburg’s path to initiating the acquisition will be more straightforward once the CCI reviews and approves the deal—usually within 30 to 60 days. The RBI’s stance will also be keenly watched, especially in the context of its approach to significant ownership changes in private banks.
The bank, on its part, may use the capital to further its retail expansion, fintech partnerships, and rural banking reach, aligning with the government’s financial inclusion vision.

Conclusion

The move by Warburg Pincus to seek CCI’s approval for a 10% stake in IDFC First Bank is more than just another private equity transaction—it’s a signal of deep-rooted foreign confidence in the Indian banking story. It reaffirms that India’s financial sector, especially nimble players like IDFC First, is resilient and primed for transformative growth in the coming decade.
As India moves forward with its digital and financial inclusion agenda, such high-profile partnerships could shape its banking future, providing consumers with more accessible, tech-driven, and inclusive financial services.

 

 

 

 

 

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Adani Enterprises Reports Exceptional Growth in Quarterly and Yearly Performance

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