The Indian banking sector is going through one of its most interesting phases, with new investors entering and old shareholders making exits. The latest development involves Bandhan Bank, which has sold a significant portion of its stake in YES Bank. The sale involved 15,39,34,975 equity shares of YES Bank at ₹21.50 per share. This transaction gave Bandhan Bank proceeds of around ₹331 crore and reduced its holding in YES Bank from 0.70 percent to 0.21 percent.
This move has drawn attention across the financial world because it is not an isolated case. Several banks and institutional investors, including State Bank of India and Federal Bank, have also been reducing their stakes in YES Bank as Japan’s Sumitomo Mitsui Banking Corporation, known as SMBC, takes a bigger role in YES Bank’s future. The question that arises is whether Bandhan Bank’s decision is simply a matter of timing or a strategic step for its long-term goals.
In May 2025, SMBC announced its plan to acquire around 20 percent of YES Bank from a combination of Indian banks and other investors. The total value of this deal is about ₹13,483 crore, making it one of the biggest foreign investments in India’s banking industry.
Regulatory approvals were crucial for this transaction to move forward. On August 22, 2025, the Reserve Bank of India gave SMBC permission to acquire up to 24.99 percent of YES Bank’s paid-up share capital. Soon after, the Competition Commission of India also cleared the transaction. This paved the way for SMBC to become the largest single shareholder in YES Bank.
As part of this process, several banks reduced their holdings. Federal Bank sold about 16.63 crore shares worth nearly ₹357 crore. State Bank of India, which had been one of the main rescuers of YES Bank during its crisis in 2020, also began exiting its investment. Bandhan Bank’s sale is part of this coordinated reshaping of YES Bank’s ownership.
There are several reasons why Bandhan Bank chose to sell its stake in YES Bank at this stage.
The first reason is portfolio rebalancing. Bandhan Bank’s core strength lies in microfinance, retail banking, and lending to small businesses. Holding a minority stake in another bank is not central to its main operations. By selling most of its shares in YES Bank, Bandhan can free up capital and management focus for its own business growth.
Another reason is the opportunity to realize gains. The shares were sold at ₹21.50 each, which gave Bandhan a good return compared to the price at which many banks had originally invested in YES Bank during its reconstruction phase in 2020. At that time, several banks were directed to invest as part of a rescue plan, and now the ability to exit at a higher price makes financial sense.
Reducing risk is also an important factor. YES Bank had been under stress in the past and went through a complete reconstruction process when its financial health was in danger. Although the bank has recovered in recent years, a lingering risk perception exists. By cutting down its stake, Bandhan Bank reduces its exposure to any future problems that might arise at YES Bank.
There are also regulatory and tax considerations. The government had provided certain tax exemptions to banks that invested in YES Bank as part of its revival. These benefits also make it attractive for shareholders to sell under favorable terms when opportunities come.
The entry of SMBC as the largest shareholder is a turning point for YES Bank. The Japanese financial group brings with it strong international banking expertise, capital strength, and global credibility. SMBC has the approval to hold up to 24.99 percent, and this is expected to give YES Bank stability, better governance, and possibly improved risk management.
SMBC will also have the right to nominate two non-executive directors to the YES Bank board. Meanwhile, State Bank of India will continue to have one nominee. The presence of such large and globally recognized investors will likely improve YES Bank’s ability to raise funds in the future and strengthen its image among customers and the market.
YES Bank’s performance has been improving. In the first quarter of the financial year 2026, the bank reported a net profit of about ₹808.70 crore, which is an increase of nearly 56.7 percent compared to ₹516 crore in the same quarter of the previous year. Its shares have also gained in the stock market. The stock has risen about 33 percent in six months, moving from a 52-week low of around ₹16.02 to about ₹21 in recent trading sessions.
For Bandhan Bank, the sale has immediate financial benefits. The ₹331 crore earned from the sale can be redirected into its main business areas, such as retail and microfinance lending, where returns are higher and growth potential is strong. This step also reduces Bandhan’s exposure to equity investments that are outside its operational focus.
The move signals to investors that Bandhan Bank is concentrating on its core activities. A bank that remains focused on its strengths is generally seen as more reliable in the long run. Cleaner balance sheets, lower risk exposure, and stronger capital deployment usually lead to better market confidence.
From a market perspective, the sale fits into a broader pattern. Almost all banks that were forced to step in during YES Bank’s crisis are now exiting or reducing their stakes. This indicates that the rescue mission has been completed successfully, and YES Bank is ready for a new phase under stronger and more stable ownership.
There could be some concern that multiple banks selling their stakes might signal a lack of faith in YES Bank’s future. However, the entry of SMBC and the improvement in YES Bank’s financial performance counter this fear. For Bandhan, the sale looks more like a strategic capital decision rather than a reflection of doubt about YES Bank’s stability.
Although the sale benefits Bandhan Bank, there are trade-offs. By holding a smaller stake, Bandhan loses whatever influence it might have had over YES Bank’s strategy. If YES Bank’s performance improves dramatically under SMBC’s management, Bandhan will not benefit as much because of its reduced exposure.
There is also the opportunity cost to consider. If YES Bank’s shares rise significantly in the future, Bandhan will miss out on larger gains. Still, given the relatively small stake Bandhan held, this cost may not be too large compared to the security and liquidity gained from selling.
Looking forward, SMBC is expected to increase its stake closer to the approved 24.99 percent. Additional acquisitions from other investors such as Carlyle Group are already being discussed. As SMBC builds its presence in YES Bank, the bank will likely adopt new international practices and technologies.
YES Bank’s challenge will be to maintain its profitability and asset quality in a competitive Indian banking market. Its recent profit growth and market recovery show promise, but sustaining this momentum will require careful execution.
For Bandhan Bank, the focus will return to strengthening its loan book, improving asset quality, and expanding in the retail and microfinance segments. The ₹331 crore from the sale can be deployed in these areas, which are central to Bandhan’s growth story.
Bandhan Bank’s decision to sell most of its stake in YES Bank is not just about cashing out at a good price. It appears to be a well-thought-out strategic move. The sale reduces risk, brings in fresh capital, and allows Bandhan to concentrate on its core areas of strength. At the same time, it is part of a larger restructuring in which SMBC takes a leading role in YES Bank’s future.
While Bandhan loses the potential upside if YES Bank performs very strongly under SMBC, the decision reflects sound risk management and capital planning. In the bigger picture, this is a win-win. YES Bank gains a strong global investor to lead its next phase of growth, and Bandhan Bank secures its own balance sheet and growth focus.
This transaction underlines how Indian banks are re-positioning themselves for the future. It shows that strategic clarity and timely decisions are just as important as market performance in shaping the long-term story of the financial sector.