This weekend, Emirates NBD Bank PJSC said it plans to invest $3 billion in RBL Bank Ltd., marking the largest foreign investment in the Indian banking sector.
A wave of billion-dollar transactions for Indian banks has thrust the country’s financial sector into the global spotlight at a time when US credit losses and trade tensions have roiled investors worldwide.
This weekend, Emirates NBD Bank PJSC said it plans to invest $3 billion in RBL Bank Ltd., marking the largest foreign investment in the Indian banking sector. Earlier this month, Abu Dhabi’s International Holding Co. PJSC signs a deal to acquire Sammaan Capital Ltd. to buy for about $1 billion, while the banking division of Sumitomo Mitsui Financial Group Inc. in May agreed to pay $1.6 billion for 20 percent of Yes Bank Ltd.
All told, about $15 billion worth of deals have been made this year involving financial services firms in India, according to data compiled by Bloomberg is evident as global investors look for opportunities in one of the fastest growing major economies in the world. This builds on the momentum of previous years to invest in lenders, insurance and fintech players.
What is striking is the exuberance of what is happening elsewhere. The recent US collapse of Tricolor Holdings and First Brands Group has fueled fears of hidden credit losses. India itself is trying to reach an agreement with the US after being saddled with 50 percent tariffs that could hurt growth.
There is also no track record of triumph from foreign buyers, as the sector is still dominated by well-entrenched local players and suffered a shadow banking crisis less than a decade ago.
“The success story of foreign banks acquiring Indian banks is very limited” and is not always reflected in profit and revenue growth, said Hemindra Hazari, an independent research analyst. The large amounts that foreign investors are willing to invest shows intent, but whether they can build a profitable retail franchise in the competitive Indian market remains to be seen, he said.
For now, the suitors are focusing on the positives. Indian lenders look relatively more isolated, benefiting from rapid digital adoption, government initiatives and a large underbanked population. Japan’s megabanks have been outspoken about their appetite for Indian assets, while deep-pocketed companies from the Middle East and Europe are now setting their sights on the growing middle class in Asia’s third-largest economy.
“The Indian growth story has been accepted globally,” RBL CEO RBL R Subramaniakumar said at a briefing on Sunday. He pointed out that a stable financial system and robust regulators increase its appeal.
A string of decent gains for the sector and the prospect of more deals have supported share prices of late. The Nifty Financial Services Index climbed to an intra-day record on Monday. Shares of RBL Bank rose as much as 8.4 percent to the highest level since February 2020.
In recent years, the Reserve Bank of India has taken steps to strengthen the financial sector through measures aimed at boosting the flow of credit and encouraging lending and financing. The regulator has also clamped down on excessive risk-taking, regularly warning shadow lenders that they are pursuing growth at all costs and promising to take action if they do not strengthen risk controls.
The moves come after the sector exploded about seven years ago, when a build-up of bad loans weighed on growth. This prompted the government to revise bankruptcy laws and recapitalize state-owned banks.
Now policymakers are exploring ways to attract more foreign investment, including discussing options to make it easier for foreign investors to increase their stakes in state-owned banks and to allow large companies to apply for banking licenses. Bloomberg News previously reported.
Recent earnings figures of heavyweights HDFC Bank Ltd. and ICICI Bank Ltd. ensured that both lenders reported better than expected results thanks to lending growth, even as interest margins remain under pressure. The 12-member Nifty Bank Index has risen by more than 13 percent this year and closed at a record high on Friday.
More jumbo deals could follow. A planned sale of government stakes in IDBI Bank Ltd. is expected to raise billions. Japan’s largest lender, Mitsubishi UFJ Financial Group Inc., is actively hunting for takeover targets and is said to be in advanced talks to acquire a stake in Shriram Finance Ltd. to buy.
“Geopolitical risks have accelerated financial and supply chain risks, and foreign investors are looking for alphas in countries that minimize these risks,” said Vivek Ramji Iyer, partner and leader in financial services practices at Grant Thornton Bharat. “India’s domestic focus and low correlation with the global economy make it a lucrative entry point.”
More stories like this are available at bloomberg.com
Published on October 20, 2025
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