The Reserve Bank of India (RBI) has given its 'in-principle' approval to Japan's Sumitomo Mitsui Banking Corporation (SMBC) for setting up a wholly-owned subsidiary (WOS) in India. This significant decision, announced on Wednesday, January 14, 2026, marks a pivotal step in SMBC's expansion strategy within the Indian financial landscape. Currently, SMBC operates in India through a branch network across New Delhi, Mumbai, Chennai, and Bengaluru. The approval facilitates the conversion of these existing branch operations into a locally incorporated WOS. This transition is expected to provide SMBC with substantially greater operational flexibility, allowing it to function on par with domestic banks. As a wholly-owned subsidiary, SMBC will gain the freedom to open branches more easily across the country, a privilege not typically extended to foreign bank branches. Another key advantage of the WOS structure is the ring-fencing of capital, ensuring that the subsidiary's financial resources in India are separate from those of its parent bank. This regulatory safeguard offers an additional layer of protection for the Indian financial system against potential external shocks. The move further solidifies SMBC's commitment to the Indian market, especially following its acquisition of a 24.22 percent stake in Yes Bank in 2025, making it the private sector lender's largest shareholder. This development is seen as a strategic enhancement of SMBC's direct operational presence, enabling it to leverage its global expertise to foster trade and investment between Japan and India.