On agenda: Funding for M&A, easy mkt lending

THE RESERVE OF India (RBI) on Wednesday announced a raft of measures — 22, to be precise — to support growth by improving ease of doing business, increasing the flow of credit as well as giving a boost to stock markets.

- JOYDEEP GHOSH

To improve the flow of credit, the banking regulator has proposed to provide an enabling framework that will allow banks to fund mergers and acquisitions of India Inc - something the banking sector has been seeking for some time.

In addition, there are plans to remove any regulatory ceiling on lending against debt secutities, the limit of lending against shares has been increased from ₹20 lakh to ₹1 crore and the upper limit for financing initial public offering (IPO) from ₹10 lakh to ₹25 lakh.

These measures are expected to give a significant boost to the IPO market that has been bustling with action. In September alone, 25 IPOs — the highest since 1997 — raised as much as ₹13,302 crore. In all, there are expectations that over ₹2 lakh crore could be raised in FY26.

Further, the 2016 framework that disincentivised lending more than ₹10,000 crore by banks to large corporates (single group exposure) is expected to be withdrawn. Instead, the concentration risk is proposed to be managed through specific macroprudential tools.

CS Setty, chairman at State Bank of India, said “The RBI policy statement was an authoritative one towards unveiling of market reforms and moving beyond the rate actions.”

Non-banking financial companies (NBFCs) will get relief for investing in operational and high-quality infrastructure project through lower risk weights.