TOKYO -- Japan's Sumitomo Mitsui Banking Corp. has added $600 million to the capitalization of its New Delhi branch, boosting its lending capacity as India's economy starts to bounce back from the coronavirus pandemic.
The cash injection announced last week doubles the branch's capital to $1.2 billion, the largest amount among Japan's three megabanks. Because Indian law bars banks from lending more than 20% of their total capital to a single borrower, the infusion will enable larger loans to companies with higher capital needs, broadening SMBC's potential customer base.
The bank anticipates growing demand for capital in an economy starting to recover from the damage wrought by both the virus and the lockdowns used by authorities to curb its spread.
Mobile phone manufacturers are considering production expansion, and merger and acquisition activity is picking up, giving SMBC more potential opportunities to offer financing.
The bank said Wednesday that it has set up a third Indian sales office in Chennai. This improves its access to southern India, a region where many automakers and other manufacturers are concentrated. SMBC had previously handled business there through its New Delhi office, in the northern part of the country.