RBL Bank MD and CEO R Subramaniakumar recently compared Emirates NBD Bank’s (ENBD) proposal to acquire a 60 percent stake in RBL Bank, through a primary infusion of about $3 billion (₹26,850 crore) to “bees attracted to flowers to collect nectar and pollen”.
The CEO’s comment also reflects ongoing developments in the country’s fast-growing banking sector.
The current financial year has seen a large number of deals in banking, financial services and insurance (BFSI), with foreign entities entering into agreements to buy significant or controlling stakes in the domestic entities.
In addition to the deal between RBL Bank and ENBD, the BFSI space saw Japanese bank SMBC invest around $1.6 billion to acquire an over 20 percent stake in YES Bank, and Abu Dhabi’s IHC announced its intention to acquire a controlling stake in non-bank lender Sammaan Capital (formerly Indiabulls Housing Finance) for $1 billion dollars.
Last Friday, the Federal Bank’s board of directors approved a preferential issue of about 27.29 crore warrants, amounting to ₹6,196.51 crore, to Blackstone-backed Asia II Topco XIII Pte Ltd.
Macros available
According to Prashant Kumar, MD and CEO of YES Bank, the country needs big banks to support economic growth. Domestic banks also need the “right kind of capital,” he says.
“The source of capital is very important. If it comes from long-term strategic players, it is very important and required for building larger banking institutions. Today, our banking system is capable of attracting foreign capital…Earlier, the regulators may not have been willing to give these approvals; but with a change in approach, the Indian financial market is able to source foreign capital,” says Kumar, adding that apart from India, no other country sees every country registering GDP growth of more than 6 percent. fiscal.
With the demographic dividend of young people who are well qualified and skilled, and political stability in place, domestic banks are an ideal investment option for strategic foreign investors, says the head of Yes Bank.
Subramaniakumar of RBL Bank agrees: “The biggest reason is India’s growth story. We are talking about Viksit Bharat in 2047. I don’t see this story coming from any other country. Our population is 1.4 billion… our demographic dividend is such that we have a large number of skilled people to turn investments into reality. Our domestic consumption will be able to support all investments which are done to record.”
He added that the ENBD-RBL partnership will enable the latter to strengthen its international trade finance and asset management activities, expand its market share and strengthen corporate governance standards.
Healthy sector
Pratik Shah, partner and national financial services leader at EY India, says the Indian banking sector has become stronger, cleaner and better capitalized in recent years. The system has seen a decisive improvement in asset quality, record low non-performing assets (NPAs), robust profitability and healthy provisioning.
“Public sector banks (PSBs) have become profitable, with the average ROA (return on assets) improving from -0.5 percent in FY19 to 1 percent in FY25, while the average ROA of private sector banks increased from 0.2 percent to 1.2 percent. Similarly, the CET (common equity tier 1) ratio for PSBs and private sector banks sector strengthened to 13 percent and 16 percent respectively. FY25,” he says.
Balance sheets are now much more resilient, liquidity is comfortable and most banks are positioned for sustainable double-digit credit growth, he adds.
“Foreign banks and investors view India as a unique convergence – a large, under-penetrated market, robust institutions and a reform-oriented policy framework. Their interest is not limited to mid-sized or non-promoter driven banks; rather, they seek strategic footholds in institutions where they can contribute capital, technology, treasury management and sector-specific expertise,” says Shah.
According to Ramkumar S, partner, Grant Thornton Bharat, there are three reasons why foreign banks invest in Indian lenders: India’s growth story; the acquisition route is more convenient than the organic route; and the government’s drive to bring in foreign capital for PSBs.
“It will take time to set up a bank from scratch and expand brick by brick… new banking licenses are scarce. It is useful to monetize an existing bank’s network and expand growth,” he says. “The government wants to unlock the value of PSBs… Capital infusions will help provide credit for critical infrastructure projects,” he added.
Vikram Gupta, partner at Hunt Partners, says global banks are not looking at India as a bailout but as a serious growth opportunity. With their home markets slowing, they are betting on India’s strong credit cycle and expanding its consumer and SME base.
“This influx of capital and partnerships is also changing the talent landscape. Foreign ownership and strategic alliances are raising the bar for leadership quality, governance and succession planning. They are also making mid-market banks more attractive to seasoned professionals,” he says. As these banks expand into digital lending, wealth and payments, Gupta sees rising demand for leaders with cross-border exposure, technological depth and risk management sophistication.
Tailpiece
As the foreign banking bees zoom in to sip nectar from a bouquet of Indian banks, the real test will be whether these cross-border acquisitions lead to true integration of systems, culture and risk understanding rather than a temporary convergence of convenience, as noted by a former senior RBI official in a Basispoint Insight column.
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Published on October 27, 2025
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