Sumitomo Mitsui eyes further India expansion

Sumitomo Mitsui Financial Group wants to make further inroads into India, drawn like many of its peers to the rapid growth of the market. 

Japan’s second-biggest lender is considering how to become more of a full-fledged financial player in India, despite the regulatory hurdles there. There are gaps in its offerings that can be filled, such as targeting medium-sized businesses or banking services for consumers, according to new chief executive officer Toru Nakashima.

“India’s economic growth is just so fast, that’s really attractive,” Nakashima said in an interview. 

The country is rapidly becoming a focus for Japan’s top banks, which have been building their presence in Asia’s emerging economies such as Indonesia and Thailand where they have bought stakes in local lenders. India presents a stark contrast with what the Japanese banks face at home, with its population overtaking China’s last year, and its economy set to surpass Japan in 2026, according to International Monetary Fund figures.

Sumitomo Mitsui has been active in India. In 2021, the lender bought a majority stake in Fullerton India Credit for about US$2 billion, seeking to tap into demand for personal and small business loans. Nakashima said the Indian unit, now called SMFG India Credit, is growing rapidly. 

“It’s really awesome to see the momentum, especially when you are so used to Japan’s financial market,” Nakashima said.

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The bank is also growing its business with large companies in India through loans and other banking services. Sumitomo Mitsui has consistently ranked among the top bookrunners for Indian offshore loans, according to data compiled by Bloomberg. HSBC Holdings toppled the lender and its domestic rivals last year. 

“What we are missing is the middle between them, a bank that offers services for medium-sized businesses and deposit transactions with individual customers,” Nakashima said.

Its ambitions in India may however be constrained by India’s regulations that make it impossible to buy a bank in the country, as well as other restrictions. 

“As a developing country, occasionally it’s not totally predictable how legal and other systems work,” Nakashima said. “We need to overcome these challenges.” BLOOMBERG