Mizuho Financial Group will join forces with India's top bank, State Bank of India, on syndicated loans and other areas, as Japan's second-largest lender looks to capitalise on the growing Indian economy.

The deal, the first such alliance between a large Japanese bank and an Indian lender, comes as Tokyo banks are returning abroad after years of retrenchment.

A spokeswoman for Mizuho, Masako Shiono, said the agreement did not involve a capital alliance and that such a tie-up was not being considered at present.

Mizuho said in a statement the agreement would give its corporate lending unit, Mizuho Corporate Bank, access to State Bank of India's network of 14,000 branches.

'In addition to the increase in Japanese companies establishing operations there in recent years, there are many promising business opportunities anticipated in India, including various large infrastucture-related projects,' the statement said.

Currently, Mizuho Corporate Bank operates branches in Mumbai and New Delhi.

With ample access to funds and facing limited growth opportunities at home, Mizuho and other major Japanese banks have once again started to expand overseas.

Last week Mizuho said it would invest $1.2 billion in subprime-hit brokerage Merrill Lynch, the first major investment by a Japanese bank in US rival since 1989.

Shares of Mizuho closed up 10.9 per cent at 509,000 yen yesterday, as Tokyo stocks posted their biggest one-day in nearly six years on confidence about a US tax rebate.