Global Banks Rush to Buy Stakes in Indian Lenders as India Relaxes Foreign Ownership Norms

Global financial giants are accelerating investments in India’s banking sector, driven by the country’s strong economic outlook and a more relaxed stance by regulators toward foreign ownership.

$8 Billion in Foreign Deals This Year

According to Dealogic data:

• 2025 YTD foreign investments: $8 billion

• 2024: $2.3 billion

• 2023: $1.4 billion

Analysts say this surge marks a “new chapter” for Indian banking as investor confidence rises.

India Signals Openness to Foreign Capital

• The RBI is reviewing its 15% cap on foreign ownership in private banks.

• The government has expressed interest in creating “big banks” through consolidation.

• Regulators have already been approving larger deals on a case-by-case basis.

Major Cross-Border Banking Deals

• Emirates NBD (UAE) bought a 60% stake in RBL Bank for $3 billion — the year’s largest deal.

• Sumitomo Mitsui Financial Group (Japan) purchased 24.2% of Yes Bank for $1.7 billion, becoming its biggest shareholder.

• Mitsubishi UFJ Financial Group (MUFG) is in advanced talks to acquire a large stake in an NBFC, with Shriram Finance being one of the options.

  • A potential 20% stake for $2.6bn is reportedly being explored, though the deal is not final.

Why Global Banks Want India

Experts say India offers:

• High economic growth

• Strong credit demand

• Room for mid-sized banks and NBFCs to expand

• Lower valuations compared to India’s broader equity market

Valuation snapshot:

• Indian equities: 23× forward earnings

• Indian financials: 17× forward earnings (Goldman Sachs)

Japan’s banks, facing ageing populations and low growth at home, are particularly active.

Shadow Banks Back in Focus

After easing post-pandemic restrictions, the RBI has encouraged NBFCs to expand again.

Key deal:

• International Holding Company (UAE) acquired 43.5% of Sammaan Capital for $1 billion — one of the largest NBFC transactions this year.

Momentum Reflects India’s Long-Term Appeal

Regulators see the buying spree as a “vote of confidence” in India’s financial system. With decades of credit growth ahead, global investors are positioning themselves early.

As one investment banker put it:
“Anyone buying a bank in India is taking a 50-year view.”