The merger of Yes Bank has been a key subject in Indian corporate law and banking policy discussions since its 2020 financial crisis. Once a rising private sector lender, Yes Bank’s downfall triggered a state-led rescue plan, stirring debates on foreign ownership, regulatory restrictions and strategic restructuring. Recent developments regarding Sumitomo Mitsui Banking Corporation's (SMBC) interest in acquiring a significant stake in Yes Bank have reignited legal and financial scrutiny. Law students and professionals must examine the evolution of this case to understand the regulatory framework, shareholder rights and cross-border M&A compliance in India's banking sector.
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The Fall of Yes Bank: A Legal Prelude to Merger Talks
Yes Bank’s financial collapse in early 2020 laid the foundation for future merger discussions. Legal intervention by the RBI highlighted the importance of regulatory oversight.
In March 2020 the Reserve Bank of India (RBI) imposed a moratorium on Yes Bank, limiting withdrawals to ₹50,000 per account. The action was triggered by years of unchecked lending practices, soaring bad loans and poor corporate governance. With depositor panic rising regulatory intervention was inevitable.
Key Regulatory Action
Moratorium under Section 45 of Banking Regulation Act, 1949
RBI took over board control and aimed to prevent systemic risk.
Highlighted the need for lawful restructuring under financial distress.
SBI-Led Rescue Plan: Not a Merger, But a Legal Lifeline
The restructuring plan led by the State Bank of India (SBI) was a capital infusion—not a formal merger of Yes Bank with SBI—yet it has led to frequent legal inquiries about whether Yes Bank has merged with any public bank.
Legal Clarification:
1. Will Yes Bank merge with SBI?
No. It was a strategic bailout. SBI invested ₹7,250 crore and became the largest shareholder, holding 23.97% of shares as of FY25. This does not constitute a merger under Indian company law.
2. Is Yes Bank merged with SBI?
Legally, no. The two entities operate independently. The arrangement was regulatory intervention, not a merger of equals or consolidation.
3. Yes Bank merger with which bank?
There is no completed merger with any bank to date.
Revival and Performance: Is a Merger Still Needed?
In the years following the restructuring, Yes Bank focused on book clean-up and capital recovery. By Q4 FY25, it reported a 59.3% YoY increase in profit to ₹745 crore. However, investors remain cautious due to stagnant share performance.
While revival efforts reduced the likelihood of a government-forced merger the prospect of private acquisition gained momentum.
Sumitomo Mitsui Banking Corporation (SMBC) Enters the Scene
Recent news of the merger of Yes Bank involves the Japanese financial giant Sumitomo Mitsui Banking Corporation (SMBC), which seeks a controlling stake.
Key Deal Highlights
Merger of Yes Bank latest news today: SMBC plans to acquire up to 51% through a phased share purchase and open offer.
SBI may sell up to 20% of its stake.
Other shareholders like Axis Bank, HDFC, Kotak, LIC, Advent International, and Carlyle may exit.
Yes Bank merge with which bank? – If the deal proceeds, SMBC will effectively be the new promoter, though not through a classical merger, but via strategic acquisition.
Legal Barriers: RBI's Voting Rights and Promoter Caps
Even as SMBC eyes majority ownership, Indian law presents unique hurdles for foreign investors. Law students must understand the RBI's regulatory stance here.
Voting and Ownership Caps
RBI limits foreign promoter voting rights to 26%, even if shareholding exceeds that.
Promoters must reduce stake to 26% within 15 years (per RBI norms).
SMBC seeks board-level influence, including CEO nomination via the Nomination and Remuneration Committee (NRC).
This raises important questions about what happens if Yes Bank is merged under foreign control and how Indian laws balance global capital with domestic governance.
Speculation Around Mergers with Indian Banks: HDFC, Axis, and Others
Legal and investor circles often speculate on whether a merger of Yes Bank with HDFC Bank or Yes Bank merger with Axis Bank could be on the table. However, such talks remain unfounded as per Yes Bank's own NSE clarification.
Official Position
Yes Bank issued a public statement denying finality or material development regarding any merger.
No binding agreement exists with HDFC, Axis, or any domestic bank.
Such speculations fall under the “preliminary and speculative” legal classification.
SMBC’s Strategic Intent: Capital Infusion, Not Just Control
For SMBC, the acquisition offers entry into India's fast-growing banking sector with high interest margins compared to Japan.
Financials Behind the Deal
₹13,500 crore (USD 1.58 billion) investment.
Expected to reduce SMFG’s CET1 ratio by 24 bps to 12.6%.
Long-term strategic intent outweighs short-term capital stress.
This transaction also reflects broader global interest in Indian banking, but is constrained by regulatory caps—making the merging of Yes Bank complex and layered under Indian law.
Will the Merger Materialize? What Lies Ahead
While the structure of the deal hints at an indirect takeover, several legal formalities remain.
What happens if Yes Bank is merged (hypothetically)?
Foreign investor must comply with RBI’s promoter norms.
Stakeholder realignment would require open offers, SEBI compliance, and possibly Competition Commission of India (CCI) review.
Any operational merger with another Indian bank would need Cabinet approval and legislative considerations.
Conclusion: A Corporate Law Case Study in Motion
The merger news of Yes Bank reflects evolving corporate governance norms, regulatory intervention, and foreign investor policy in India’s banking ecosystem. For now, Yes Bank is not merged with any bank, but SMBC’s involvement has triggered India’s biggest private banking M&A speculation.
For law students and professionals, this scenario offers critical insights into:
RBI-led bailouts vs. formal mergers.
Cross-border M&A under regulatory constraints.
The fine balance between economic liberalization and sovereign oversight in financial institutions.
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Merger of Yes Bank: FAQs
Q1. Which bank merged with Yes Bank?
As of now, no bank has merged with Yes Bank. The State Bank of India led a capital infusion in 2020 but this was not a legal merger.
Q2. Who is purchasing Yes Bank?
Sumitomo Mitsui Banking Corporation (SMBC) is planning to purchase up to a 51% stake in Yes Bank through a phased acquisition and open offer.
Q3. Has SBI acquired Yes Bank?
No, SBI has not acquired Yes Bank. It remains an independent entity. SBI became the largest shareholder with a 23.97% stake post the 2020 rescue plan.
Q4. Is SMFG buying Yes Bank?
Yes, SMFG (Sumitomo Mitsui Financial Group) is acquiring a 20% stake initially, with intent to raise it to 51% subject to regulatory approvals.
Q5. Will Yes Bank merge with SBI?
There is no legal merger between Yes Bank and SBI. The 2020 transaction was a recapitalization, not a statutory merger or acquisition.
Q6. What is the latest merger news of Yes Bank?
The latest reports suggest SMBC may acquire a controlling interest in Yes Bank, but the discussions are still preliminary and not yet finalized.
