Banks to seek RBI nod to finance M&As: Setty

STATE BANK OF India chairman Challa Sreenivasulu Setty on Monday said the Indian Bank's Association (IBA) is preparing a formal recommendation to the Reserve Bank of India (RBI) to allow bank financing for mergers and acquisitions (M&As), particularly for listed companies with shareholder-approved deals.

- MAHESH NAYAK

"We have been requesting the regulator, and will make a formal request from the IBA as well, to allow bank financing for acquisitions where transparency and governance are ensured," Setty said at the FIBAC 2025 conference.

This marks a strategic shift from earlier regulatory caution rooted in concerns over hostile takeovers, and reflects the industry's readiness to support corporate consolidation and strategic expansion.

SBI chairman noted that legacy overhangs, such as constraints under project financing guidelines and net capital ratio norms, have been mainly addressed, setting the stage for a more flexible credit environment.

"It's not a supply issue anymore. It's about demand visibility. And when that demand returns, banks must be ready."

It's time to position the banking system as the cornerstone of India's economic transformation, Setty said.