With board approval secured, Yes Bank is gearing up for growth, backed by global giant SMBC and strong financials 

Yes Bank has taken a major step toward strengthening its financial position by getting approval from its board to raise ₹16,000 crore. This move is aimed at boosting its capital base, supporting future growth, and attracting global investors. The fundraise includes both equity and debt, and comes at a time when the bank is showing signs of revival and stability. 

Here’s a detailed look at the fundraise, why it matters, and what could come next. 

Details of the Fund Raise 

The total fundraise will be split between equity and debt: 

₹7,500 crore will be raised through equity shares. 

₹8,500 crore will be raised through debt instruments like bonds or debentures. 

The equity part will involve issuing new shares, but the bank has put a limit on this. The total dilution from equity and any debt converted into shares will not exceed 10% of the bank’s shareholding. This is to protect the interest of existing shareholders. 

The bank may raise the debt in Indian rupees or foreign currency and plans to do so in multiple phases, depending on market conditions. 

Why the Bank Is Raising Funds 

1. Strengthening Capital Base: Yes Bank wants to maintain a strong financial base. Its capital adequacy ratio (a measure of a bank’s financial health) is already above regulatory requirements. However, by raising more funds, the bank will have more room to grow its loan book, handle future risks, and remain compliant with new regulations.
2. Support for Future Growth: The funds will help the bank expand lending to individuals, small businesses, and corporations. It also wants to invest more in digital banking, enhance customer services, and improve its risk management systems.
3. Strategic Partnership with SMBC: In May 2025, Japan’s Sumitomo Mitsui Banking Corporation (SMBC) bought a 20% stake in Yes Bank by purchasing shares worth around ₹13,483 crore from existing investors like SBI. This deal is a game-changer, as it brings in global expertise and governance practices. With this fundraise, SMBC is expected to continue playing a key role and could even participate further to maintain its shareholding.
4. Improved Corporate Governance: Changes have been made to the bank’s internal rules to allow representation from both SMBC and SBI on the board. This will help strengthen governance, improve oversight, and align the bank with international standards.

What Will the Money Be Used For

Yes Bank has not shared an exact breakdown of how the funds will be used. However, such capital raises typically support the following: 

Increasing the loan book across retail and business customers 

Improving asset quality by reducing bad loans and managing risk 

Strengthening the digital banking platform 

Maintaining liquidity buffers for future uncertainties 

In the past, the bank used similar capital infusions to stabilize after its financial crisis in 2020. This time, the focus is on growth and transformation. 

Market Reaction and Share Price Movement 

Following the board’s approval of the fundraise, Yes Bank’s stock rose by nearly 2% to around ₹21.24. This bounce came after the stock had dropped sharply the previous day, mainly due to concerns about SMBC’s rising influence. 

Despite the rise, many analysts remain cautious. Several brokerage firms have issued “sell” ratings on the stock, with average price targets around ₹16–₹17, suggesting potential downside from current levels. 

Risks and Challenges 

While the fundraise is a positive move, there are still a few risks: 

1. Shareholder Dilution: Although the bank has capped dilution at 10%, existing shareholders may see a slight drop in their ownership percentage and earnings per share.
2. Debt Market Conditions: Raising ₹8,500 crore through debt depends on favorable market conditions. If interest rates rise or global markets become unstable, it could impact the cost and success of the debt issuance.
3. Regulatory Approvals: The fundraise still needs clearance from the Reserve Bank of India (RBI) and SEBI. While approvals are likely, any delays could affect timelines.
4. Political Attention[Text Wrapping Break]Some political leaders have raised concerns over foreign ownership in Indian banks. Although SMBC’s involvement has regulatory backing, such issues could create public or political resistance.

Changing Ownership Structure 

Yes Bank went through a major restructuring in 2020 when several Indian banks, including SBI, HDFC, and ICICI, stepped in to save it. Over time, the bank has attracted new investors, with SMBC now holding 20% after its recent deal. SBI is expected to retain a stake of over 10%, keeping its influence intact. 

With both SBI and SMBC on the board, the bank is now supported by both Indian public sector strength and global private sector expertise. 

Financial Performance Snapshot 

Yes Bank has been showing improved financial results in recent quarters: 

Net Profit in Q4 FY25 rose 63% year-on-year to ₹738 crore 

Net Interest Income (NII) increased by 5.7% to ₹2,276 crore 

Gross Non-Performing Assets (NPAs) stood at 1.6% 

Net NPAs improved to 0.3% 

Capital adequacy ratios also remain healthy: 

Core Equity Tier 1 (CET1): 13.5% 

Total Capital Adequacy: 15.6% 

These numbers show that the bank has stabilized and is now focusing on the next phase of growth. 

What to Expect Next 

Here’s what the coming months may look like for Yes Bank: 

Regulatory Approvals: The bank will seek formal clearances from RBI and shareholders. 

Investor Outreach: The bank may conduct roadshows to attract investors for both equity and debt portions. 

Tranche-Based Fundraising: The money is likely to be raised in phases, based on investor demand and market conditions. 

Board Restructuring: With SMBC and SBI getting board representation, governance improvements will take shape. 

Yes Bank’s ₹16,000 crore fundraise marks a new chapter in its recovery and growth journey. With strong financial results, backing from major investors, and plans to expand lending and digital services, the bank is positioning itself for a stronger future. 

The success of this capital raise depends on market response, regulatory support, and effective use of funds. If executed well, it could boost confidence among stakeholders and help the bank regain its standing as a reliable player in the Indian banking sector. However, careful monitoring of dilution impact, debt costs, and regulatory approvals will be essential in the months ahead.