Rising Global Interest
Foreign banks are showing strong interest in India’s mid-sized private banks. Recently, Dubai-based Emirates NBD made a takeover offer for RBL Bank, while Japan’s Sumitomo Mitsui Banking Corporation (SMBC) acquired a 24.2% stake in Yes Bank. These deals highlight the growing confidence of global investors in India’s banking system.
Emirates NBD plans to buy up to 60% of RBL Bank through a $3 billion investment at ₹280 per share, valuing the deal at about 1.1 times the bank’s FY25 book value. Meanwhile, SMBC’s Yes Bank purchase was done at 1.3 to 1.4 times the book value. Other mid-sized banks like Federal Bank and IDFC First Bank trade at 1.7 times and 1.5 times their FY25 book values, respectively.
Bank Performance and Profit Trends
In the September 2025 quarter, several mid-sized banks reported mixed results. RBL Bank’s net profit fell nearly 20% year-on-year to ₹178.5 crore due to higher costs, even though its bad loan ratio improved to 0.57%. Federal Bank also saw a profit dip of 9.5% to ₹955.3 crore because of higher provisions.
On the other hand, IDFC First Bank’s profit rose sharply by 76% to ₹352.3 crore as its provisions declined. Yes Bank’s profit grew 18.3% to ₹654.47 crore thanks to better asset quality and a focus on retail lending. Most banks experienced a slight fall in net interest margins (NIMs) after the Reserve Bank of India cut repo rates in June 2025.
Growth Outlook and Market Valuations
The foreign investments are expected to boost RBL Bank’s net worth from ₹15,000 crore to over ₹42,000 crore, helping it expand its branch network and lending capacity. Analysts believe that overseas partnerships will strengthen these banks’ capital base and accelerate digital and retail growth.
However, valuations are already high. RBL trades at over 25 times its FY26 earnings, Yes Bank at 20 times, and Federal Bank at 15 times. Despite this, global investors appear confident that India’s mid-sized lenders will continue to play a major role in the country’s expanding credit market.
