India’s central bank plans to permit local lenders to finance mergers and acquisitions, a move expected to boost the country’s US$40 billion-plus (RM168.46 billion-plus) deals market.
The Reserve Bank of India will soon propose a framework enabling banks to directly fund corporate takeovers, Governor Sanjay Malhotra said in Mumbai on Wednesday after the central bank kept interest rates unchanged.
The proposed relaxation in rules was part of a slew of measures announced by the RBI. It also plans to remove regulatory ceilings on lending against listed debt securities and enhance limits for lending against shares. The moves pushed the Nifty Bank index up 1.4% to trade at the day’s high.
The announcement comes at a time when corporate appetite for M&A is rising in India, fuelled by healthier balance sheets, years of debt reduction and strong domestic demand. The volume of domestic M&A has reached nearly US$41 billion in 2025, a slight improvement from a year earlier.
“The aim will be to promote stability while at the same time improving competitiveness, encouraging and enhancing growth of the economy,” Malhotra told a news conference when asked about the easing on bank regulations.
Currently, lenders are barred from directly financing acquisitions due to regulatory and asset-quality concerns. Most corporates typically turn to non-banking financial companies, foreign lenders or public and private markets.
Source: Theedgemalaysia
