Japan’s Mizuho Bank Eyes India: A Strategic Move Amidst Changing Financial Winds

Verghese V Joseph –

In the rapidly evolving global financial landscape, Japan’s Mizuho Bank is eyeing India as a strategic market for expansion. This move comes at a time when Chinese financial institutions have been aggressively expanding their presence in Africa and other emerging markets. Mizuho Bank, one of the largest financial institutions in Japan, is looking to tap into India’s growing economy and vast market potential.

India, with its population of over 1.3 billion people, offers a vast market for financial institutions. The Indian government’s focus on economic reforms and ease of doing business has made the country an attractive destination for foreign investors.

Mizuho Bank’s strategic move into India is part of its broader expansion plan in the Asia-Pacific region. The bank has been strengthening its presence in the region, with a focus on Southeast Asia, China, and India. In India, Mizuho Bank has been operating since 1984, with a representative office in Mumbai. However, the bank is now looking to upgrade its presence by setting up a wholly-owned subsidiary in the country.

Mizuho Bank’s expansion plan in India comes at a time when the Indian government is promoting foreign investment in the country’s financial sector. The government has allowed foreign banks to open branches and subsidiaries in the country, subject to certain conditions. Mizuho Bank’s move to set up a wholly-owned subsidiary in India is a strategic decision, as it will allow the bank to offer a wider range of financial services to its customers in the country.

In February this year, Mr Masahiko Kato, President & CEO, Mizuho Bank, Ltd, and Credit Saison Co., Ltd. signed an agreement for Mizuho Bank and a subsidiary of Mizuho Bank to invest up to INR 12 billion (equivalent to JPY 21 billion; equity ratio: equivalent to 15%) in Credit Saison’s Indian subsidiary Kisetsu Saison Finance (India) Pvt. Ltd.

Credit Saison had developed Credit Saison India from scratch using only its own capital. Since the start of services in 2019, Credit Saison India has achieved solid growth with a strategy of stepping up its business model to adapt to the current growth phase

With the investment, Mizuho and Credit Saison aim to grow Credit Saison India into a top financing company in India with a capitalization of JPY 1 trillion, and positively contribute to financial inclusion and sustainable societal development in India.

Over the years, the bank has been steadily expanding its footprint in India. In November 2023, the bank made a capital infusion of around USD 500 million in India. This has taken the total capital in India to above INR 100 billion (~USD 1.2 billion), instantly almost doubling bank’s single borrower exposure limit to INR 20 billion (~USD 240 million). Mizuho India is expanding its footprint in India in terms of offices, employees and capital, and is also preparing to set up a new branch in GIFT City later this year.

In 2018, Mizuho Bank, Ltd. signed a memorandum of understanding (MOU) for business cooperation with Economic Development Board, Andhra Pradesh (APEDB), the Investment Promotion Entity of the Government of Andhra Pradesh.

This is the first MOU that APEDB has concluded with a Japanese bank. This is also the seventh MOU concluded with an Indian state investment promotion entity by Mizuho, which previously concluded MOUs with the Karnataka Udyog Mitra (April 2012), the Industrial Extension Bureau of Gujarat (January 2015), the Government of Andhra Pradesh (July 2015), the Industrial Guidance and Export Promotion Bureau of Tamil Nadu (September 2015), Maharashtra Infrastructure Development Corporation (September 2015), and Haryana State Industrial Infrastructure Development Corporation (January 2016).

Mizuho India is getting set to meet clients’ diversifying needs, facilitate their growth as a strategic partner for business development, and participate as a force multiplier in the unique growth story of India.

Mizuho Bank’s expansion in India is not without challenges. The bank will face stiff competition from established players in the Indian financial market, such as State Bank of India, HDFC Bank, and ICICI Bank. Moreover, the Indian financial market is highly regulated, and Mizuho Bank will have to comply with various regulations and guidelines.

However, the opportunities in the Indian financial market are immense. The country’s growing economy and increasing financial inclusion have led to a surge in demand for financial services. Moreover, the Indian government’s focus on digitalization and financial technology offers a significant opportunity for Mizuho Bank to leverage its expertise in these areas.

Mizuho Bank has been focusing on digitalization and financial technology to enhance its competitiveness in the global financial market. The bank has been investing in emerging technologies such as blockchain, artificial intelligence, and cloud computing. In India, Mizuho Bank plans to leverage its expertise in digitalization and financial technology to offer innovative financial services to its customers.

Mizuho Bank’s strategic move into India is a significant development in the global financial landscape. The bank’s expansion plan in India is part of its broader expansion strategy in the Asia-Pacific region. Despite the challenges, the opportunities in the Indian financial market are immense. Mizuho Bank’s focus on digitalization and financial technology offers a significant opportunity for the bank to leverage its expertise in these areas and offer innovative financial services to its customers in India.