Sumitomo Mitsui Trust Bank and Nippon Life Insurance Co. said they will invest in a planned Mumbai-based bank to be set up by Indian conglomerate Reliance Group.
Under India’s foreign investment control rules, a foreign firm is allowed to own up to 4.9 percent of an Indian bank. A 4.9 percent stake in the planned institution is expected to cost about ¥2 billion.
The investment would mark the start of Indian retail banking by Sumitomo Mitsui Trust. It will cooperate with Nippon Life, a tie-up partner of the Reliance Group, to draw in middle-class customers.
By making the foray into India, Sumitomo Mitsui Trust hopes to improve the profitability of its overseas operations, company officials said Wednesday. The planned bank is expected to start business in fiscal 2015.
The Reliance Group has filed for financial regulatory approval to establish the institution. Details such as the size of the Japanese firms’ stakes will be worked out later.
SMTB will send officials to the new bank to provide know-how on risk management and other fields.
Nippon Life owns 26 percent of a life insurance unit and an asset management unit of the Reliance Group. It aims to expand sales of investment trust funds and other products through the companies.