When Prashant Kumar, a seasoned State Bank of India veteran, took charge of the troubled YES Bank after its 2020 restructuring, it was in a shambles. Five years later, Kumar is on a six-month extension till April 2026, setting the stage for Sumitomo Mitsui Banking Corporation (SMBC) to select his successor. This chapter will test YES Bank’s ability to steer towards sustained growth and align with SMBC’s global vision. At the bank’s Mumbai headquarters, Kumar sat down with BT to discuss the bank’s future. Edited excerpts:
On the wave of deals in the banking sector
There is a clear need to create larger banks in India to support the ambitious growth target set by the government. We have seen significant consolidation among public banks, but in the private sector, the only way to build scale is by bringing in the right kind of capital. The main sources of capital for private banks are corporate houses, private equity, and foreign banks. However, corporate houses are restricted by the RBI’s regulation, and private equity investors typically have a very short horizon, which isn’t ideal for banking. That leaves only foreign banks, which have a long-term view of India’s financial sector, as the most suitable partners. I believe getting high-quality, patient equity is crucial for sustainable growth. We are certainly seeing a policy shift in this direction, as reflected in some recent deals announced in the private banking space.
On the nature of the bank’s engagement with SMBC
They are our single largest shareholder. They are represented on our board by two nominees—one is the Head of India, and the other is the Head of Global Credit. They have already started attending our board meetings and will also participate when we finalise our annual strategy. Given their investment, it’s natural for them to be closely engaged with the management. Our strategy to grow the bank is a continuous process. We are already working towards achieving a 1% ROA (return on assets) by FY27. With the SMBC partnership, this journey could accelerate further, as we expect several positive synergies and new business opportunities to flow from the tie-up.
On synergies and opportunities with SMBC
For the first time, we have an investor with a truly long-term view—someone who is willing to stay invested and give the bank time to grow. This is the first instance of having such a patient, strategic partner. We have already started working with SMBC to identify how we can create value together. Currently, SMBC operates through five branches in India, including one at GIFT City, and serves nearly 1,000 large corporate clients. While they lend to these clients, they aren’t able to fully meet all their banking needs—for example, cash management, transaction banking, trade finance and other services are often handled by other banks. I believe we can jointly work with these corporates to offer such services and generate fee-based income. These corporate clients are also supported by a large network of SMEs in their supply chains, which opens another opportunity. We can also finance these SMEs. In addition, there are individual employees of these corporates whom we can tap for both loans and deposits.
On whether companies will shift
Today, deals are no longer just about pricing—they’re about solutions. If we provide the right solutions, customers are less sensitive to pricing. For example, in digital solutions, we are seeing very strong results. In transaction banking and cash management, we are also among the best in the industry. On the retail side, the biggest pain point for customers across the Indian banking sector is service quality. If the service isn’t good, customers will simply switch banks. That’s why our focus is on delivering superior digital solutions along with excellent customer service. And that’s one of the key reasons why our CASA growth has been higher than the industry average.
On other benefits
With the SMBC partnership, our credit rating is expected to improve further. It has already been upgraded one notch recently. Once we secure the next rating upgrade, many new opportunities will open up. Many corporates, government agencies, and public-sector companies prefer to work only with highly-rated banks, so even a single-notch improvement can make a significant difference. It will also help reduce our borrowing costs, since market funding rates are directly linked to credit ratings. This, I believe, will be another major benefit arising from the SMBC deal.
On whether SMBC will surrender its India branch licence
As of now, they have regulatory approval for up to 24.99% stake and are classified as non-promoter. Any entity that is a non-promoter can continue to have multiple (entities). There is no obligation. If they have any such strategy (of increasing their stake and surrendering their foreign banking licence), which we do not know of, then the regulatory expectation would be to integrate. But as of now, they are a non-promoter entity. They recently said that they do not intend to increase their stake.
On the business the bank is doing in the India–Japan corridor and potential overlaps with SMBC
At present, there is no overlap between what we are doing and what SMBC is doing. This is an entirely new market for us—both sides are operating in exclusive areas, and our collaboration in the India–Japan corridor is just beginning to take shape.
