The State Bank of India (SBI), India’s largest lender by assets, has urged the Reserve Bank of India (RBI) to allow banks to finance mergers and acquisitions (M&A).
Current Rule
- Under existing regulations, Indian banks are barred from lending for acquisitions.
- Companies currently rely on NBFCs or raise money via corporate bonds to fund such deals.
SBI’s Proposal
- SBI Chairperson Challa Sreenivasulu Setty announced the request at an industry event.
- Suggested allowing acquisition financing, at least for large listed companies, as a first step.
Why It Matters
- Could give corporates easier and cheaper access to funding.
- Boosts banks’ role in major corporate restructuring and growth.
- May reduce dependence on non-banking lenders and bond markets.