Hitachi will take a 26% stake by month's end in a subsidiary of the state-owned lender, which serves more than 400 million customers and boasts 34 trillion rupees ($482 billion) in assets.
SBI Payment Services, a unit of India's biggest bank, is working to gain new merchants for ATM and point-of-sale services. Hitachi aims to provide integrated services spanning ATM and POS terminal management and payment systems for banks and credit companies.
The Japanese group operates about 60,000 ATMs and 800,000 POS terminals in India through a local subsidiary, Hitachi Payment Services, which entered the business in 2014 through an acquisition.
The unit generated about 25 billion yen ($231 million) in revenue from these businesses in the year ended March 2018. Hitachi aims to double this to 50 billion yen by fiscal 2021.
Hitachi aims to eventually provide other services through the venture, such artificial intelligence-aided analysis of customer trends and other data to help banks and merchants boost earnings.
With India's government promoting digital payments, such transactions at POS terminals are projected to more than quadruple between 2018 and 2021.
E-commerce is thriving as well. Transactions are expected to grow fivefold in number from 2017 to reach 12.5 billion payments by 2020, with their value roughly doubling, according to an Indian research institute.
Leading e-wallet service Paytm -- whose parent company received an investment last August from Warren Buffett's Berkshire Hathaway -- boasts some 300 million users.
Electronic payments for train and bus fares also are expected to expand rapidly. The booming market has drawn fintech companies from the U.S. and Europe.
Hitachi seeks to develop the lucrative financial service business into a new earnings source that will help it achieve a groupwide operating margin of 10% or higher in fiscal 2021. It plans to apply the experience gained in India to Southeast Asian markets like Thailand and Indonesia.