MUMBAI: In a bid to improve credit flow, the Reserve Bank on Wednesday said it would provide an enabling framework for Indian banks to finance acquisitions by Indian corporates.

This has been a long-pending demand of Indian banks. Recently, the State Bank of India Chairman C S Setty also made a strong case for permitting banks to provide funding for mergers and acquisitions, as done by global lenders.

"To start with, we will make a formal request from the IBA (to the RBI)... at least start with some listed companies where the acquisitions are more transparent and are approved by the shareholders. (Thus) The issue of any hostile takeover of the funding can be minimised," Setty had said.

Announcing the fourth bi-monthly monetary policy review, Reserve Bank of India Governor Sanjay Malhot

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