Domestic market stagnant, Japan's mega banks set sights on India, Pg9

Key Highlights:

• Mizuho Financial Group agreed to purchase a controlling stake in Avendus for $523 million in December 2025.
• Sumitomo Mitsui Banking Corporation (SMBC) acquired a 20% stake in Yes Bank for approximately Rs 13,483 crore.
• Mitsubishi UFJ Financial Group (MUFG) is in advanced talks to acquire around a 20% stake in Shriram Finance for over $3 billion.
• SMBC Asia Rising Fund acquired a 4.99% stake in Shivalik Small Finance Bank in August 2025.
• RBI forecasts 7.3% growth for India in 2025-26.

Detailed Insights:

• Japanese mega banks are increasingly investing in India due to saturated domestic market, low interest rates, and an ageing population in Japan.
• India's fast-expanding credit market, rising consumption, and improving regulatory clarity are attracting Japanese banks.
• Japanese investments extend to non-banking finance sector with MUFG's potential stake in Shriram Finance.
• The growing Japanese presence is expected to bring long-term capital, global best practices, and stronger risk management frameworks to Indian financial institutions.
• Japan has faced near-zero real economic growth and low inflation due to an unfavourable demographic shift, shrinking workforce, and limited immigration.
• The RBI's shift in approach, previously cautious about foreign takeovers, now supports the growing presence of foreign banks in India.
• India's growth forecast is supported by strong agricultural prospects, the continued impact of GST rate cuts, low inflation and healthy balance sheets of companies and banks.

Key Concepts Involved:

• NBFC (Non-Banking Financial Company): An institution that provides financial services but does not hold a banking license.
• Cross-border Investment: An investment made by a company or individual in a foreign country.
• Investment Bank: A financial institution that provides services such as underwriting, M&A advisory, and trading for corporations and governments.