Japanese bank Sumitomo Mitsui Banking Corp (SMBC) is going to buy a large private lender Yes Bank of India. In this deal, 8 banks including State Bank of India (SBI) are also selling their stake. With this deal, these 8 banks are expected to get a big tax benefit in the September quarter. The income of Rs 13,483 crore from sales will be free from capital gains tax. With all the regulatory approvals, SMBC will complete a 20 per cent stake deal through the secondary market transaction in the same quarter.
The selling banks will record income as “other income”. Yes Bank Recovering Scheme, 2020 is a specific segment that allows banks investing in reconstruction from capital gains tax on the benefits of sales of shares. By the way, Sumitomo Mitsui Financial Group (SMFG )’s full -ridden subsidiary SMBC has also received the approval of the Reserve Bank of India for the appointment of two nominated directors in the board of Yes Bank.
8 banks will get relief from tax
SBI and seven private banks – HDFC Bank, ICICI Bank, Kotak Mahindra, Axis Bank, IDFC First Bank, Federal Bank and Bandhan Bank – have jointly signed a certain agreement to sell 20 per cent stake at the rate of Rs 21.50 per share. These banks bought shares at the rate of Rs 10 per share in 2020. Under the agreement, SBI will sell 13.19 per cent of its 24 per cent stake for Rs 8,889 crore, while the remaining seven banks will sell 6.81 per cent for Rs 4,594 crore.
Such relief will be available from tax
If there is no tax exemption, then these 8 banks would have to pay 12.5 percent of the long term capital gains tax. This section was added to the Yes Bank Recovering Scheme to make the deal easier for those banks who were hesitant to participate in the most essential capital investment to preserve the bank. The scheme states that investors investing in the shares of the investor bank and the restructed bank under this scheme will not be liable to pay capital gains tax under the Income Tax Act, 1961 (43 of 1961) on any alleged benefit or receipt of such investments.
Banks will get relief
Yes Bank’s transaction is a relief for selling banks because most of them are likely to decrease in net interest margin because they are giving benefits of policy rate cuts to borrowers. Fiscal benefits are also expected to decrease due to increase in bond seld. There is also a concern that the cut in GST slab can increase fiscal deficit and at the same time there is no hope of cutting the immediate rates. SBI, which recorded a net profit of Rs 19,160 crore in the first quarter of FY 2026, will benefit the most.
Now this can increase the share
SMBC has received approval from RBI to increase its stake in Yes Bank by 24.99 percent. According to sources associated with the case, this remaining 4.99 per cent stake can either purchase private equity firms from Advent and Carlile or invest in preferential shares issued by private bank. Apart from this, SMBC, Lone (Rs 8,500 crore) and equity (Rs 7,500 crore) are talking with Yes Bank to invest Rs 16,000 crore in the bank through a combination of equity (Rs 7,500 crore). The bank’s board has obtained the approval of shareholders to raise funds. In August, the RBI approved the SMBC application to increase its stake in the bank, while in early September, the Competition Commission of India approved the proposal.