From M&A Funding to IPO Financing: RBI Opens Door for Acquisition Financing by Banks, Expands Credit Flow to Corporates and Markets

In a landmark move set to reshape corporate financing in India, the Reserve Bank of India (RBI) has decided to allow banks to fund mergers and acquisitions (M&A) by Indian corporates. The enabling framework, announced after the monetary policy committee (MPC) meeting, marks a significant shift in banking policy and aligns Indian practice more closely with global standards. According to Sanjay Malhotra, governor, RBI, the decision is part of a broader overhaul of capital market exposure guidelines for banks and regulated entities. It is designed to improve the flow of credit, support corporate expansion and provide Indian banks with a deeper role in capital market activities. He says the framework for acquisition financing would be released shortly, following long-standing deman