The South Asian government’s tax authority has asked the bank to pay the amount on behalf of the seller, Fullerton Financial Holdings Pte. not public.
Sumitomo Mitsui withheld just US$170 million for the deal struck last year, bringing his additional tax liability to US$500 million, they said. The request was made at the end of November, one of the people said.
Due to the sudden request, Sumitomo Mitsui faces much higher costs than originally expected. Japan’s second-largest lender is working with the Indian government and Fullerton to find a solution, it said. Fullerton Financial is a unit of Singapore state investor Temasek Holdings Pte and owns the remaining 25% of Fullerton India, according to its website. Facing weak domestic growth prospects, Sumitomo Mitsui has been investing resources in Asia’s emerging markets in recent years, acquiring a 74.9% stake in Fullerton India last year, marking the first entry by a Japanese bank into the country’s retail finance business .
A spokesman for Sumitomo Mitsui declined to comment on the specific transaction, saying the lender is “taking action consistent with local laws and regulations and will continue to take appropriate action based on that.”
A spokesman for India’s Finance Ministry did not respond to emails and calls seeking comment, while a Singapore-based Fullerton Financial representative did not immediately respond to a request for comment.
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