“Our technique is to construct the India-Japan hall — supporting Japanese firms coming into India and Indian firms increasing abroad. We purpose to convey the total energy of the Mizuho group –commercial banking, funding banking, and international boutique advisory — right into a single built-in providing. This mannequin has succeeded for us within the US, and we’re assured it would succeed right here as properly,” Kato was quoted in an ET report. He added that shopper inquiries associated to India have surged sharply in recent times, rising greater than 50% in FY2024 alone.
Additionally Learn: Avendus to assist Mizuho hyperlink India, Japan, US and Europe, says Masahiko Kato, International CEO
Kato’s remarks present a revealing window into why Japan’s largest monetary establishments are deploying billions of {dollars} into India. What could seem as remoted transactions — the Avendus acquisition, giant fairness stakes in Indian lenders or personal credit score investments — are in truth a part of a deeper strategic shift. Japan’s banking giants are constructing long-term publicity to India’s development story.
Benefit India
For Mizuho, India is not only one other rising market outpost. It’s central to a deliberate technique of making a Japan-India funding hall. The financial institution is combining its conventional energy in business banking with expanded funding banking capabilities gained by way of Avendus. The target is to offer an built-in platform that serves Japanese corporates coming into India whereas additionally supporting Indian firms increasing abroad.
Kato underlined how dramatically perceptions have shifted in Tokyo. “Japanese firms now view India as their most promising market. Japan Financial institution for Worldwide Cooperation surveys have ranked India No. 1 since 2022, and Japanese funding is ready to succeed in 1.2 trillion yen in 2025. Conversations in Tokyo more and more deal with increasing in India,” he instructed ET.
Additionally Learn: NITI Aayog requires structured Commerce Missions concentrating on Japan, Center East, GermanyHe highlighted India’s structural benefits — a 1.4-billion-strong market, rising GDP, sturdy consumption, a vibrant digital ecosystem and deep expertise expertise. He additionally pointed to sectoral alternatives in semiconductors, supplies, and renewable power, the areas the place Japanese firms possess technological depth and are actively exploring partnerships.
The brand new frontier
The size of Japanese funding into India’s monetary sector illustrates how central banking and monetary providers have develop into to this technique.
Japan’s largest megabanks reminiscent of Mitsubishi UFJ Monetary Group, Sumitomo Mitsui Banking Company and Mizuho, are more and more lively in India. MUFG’s $4.45 billion funding in Shriram Finance adopted Mizuho’s Avendus acquisition. SMBC final 12 months bought a 20% stake in Sure Financial institution for $1.6 billion. MUFG additionally invested over $338.5 million in DMI Finance Personal, later elevating its stake to twenty%. In the meantime, Daiwa Securities Group has invested in Ambit.
Kato defined this surge of curiosity in easy phrases. “Two causes. First, the connection between India and Japan, governmental and people-to-people, could be very deep. Second, the Indian monetary sector throughout banking, NBFCs, asset administration and funding banking is rising quickly. Japanese traders are poised for exponential, not incremental, development in India’s monetary sector over the approaching years.”
The phrase “exponential, not incremental” captures the ambition driving Japanese capital flows. India’s monetary providers ecosystem just isn’t merely increasing however deepening and formalising at pace.
India’s structural development story
The attraction lies in structural fundamentals. India provides what Japan more and more can’t. reminiscent of rising incomes, sturdy mortgage demand, infrastructure-led development and a quickly formalising financial system. Retail and small-business lending proceed to increase, fuelled by automobile possession, private consumption and MSME financing. Credit score penetration stays comparatively low, leaving important room for enlargement.
India’s demographic profile additional strengthens its case. A younger and increasing workforce, coupled with rising digital adoption and monetary inclusion initiatives, is creating sustained demand throughout retail, MSME and company credit score segments. For banks accustomed to saturated markets, this represents long-duration development.
Kato emphasised how India’s digital ecosystem and expertise expertise pool make it a hub for innovation. For Japanese companies searching for each market entry and cost-efficient innovation, India provides a compelling mixture.
Japan’s structural constraints
In distinction, Japan’s home banking atmosphere is constrained by structural realities. The market is mature and already dominated by the “large three” megabanks — MUFG, SMBC and Mizuho. Most households and corporates are already banked. Inhabitants development is destructive, society is ageing and family credit score demand is subdued.
Though the Financial institution of Japan started elevating rates of interest final 12 months after a long time of zero and negative-rate regimes, the shift has not essentially altered the expansion equation. Margins stay skinny, credit score demand is weak and demographic decline continues to cap long-term enlargement. Many regional banks face shrinking native populations and restricted digital capabilities, resulting in consolidation somewhat than development.
Below such situations, abroad diversification has developed from strategic choice to structural necessity.
Japanese mega banks are confronting a home ceiling. Natural development at house is gradual. Alternatives so as to add new prospects or increase credit score volumes are restricted. Rising markets provide scale, rising monetary penetration and increasing credit score demand.
Amongst them, India stands out. Its increasing center class, infrastructure push and coverage emphasis on monetary inclusion generate sustained demand for banking providers. For Japanese banks, India offers publicity to consumption-led development with out the demographic drag that defines their house market. The surge in shopper inquiries reported by Kato signifies that the push into India just isn’t confined to boardroom technique. It displays actual demand from Japanese corporates searching for to embed themselves in India’s development cycle.
What’s unfolding just isn’t a tactical reallocation of capital however a long-term strategic realignment. Japanese banks are positioning themselves to intermediate commerce, funding and capital flows between two giant Asian economies whose financial complementarities are deepening. For Mizuho, the Avendus acquisition offers the funding banking muscle to enhance its business banking community. For MUFG and SMBC, fairness stakes in Indian lenders provide embedded publicity to India’s retail and MSME credit score enlargement. For securities corporations like Daiwa, India offers a platform for capital markets development.
On the centre of this transformation is a recognition voiced by Kato: “Japanese firms now view India as their most promising market.”
