India Set to Open $40 Billion M&A Market to Local Bank Funding

The Central Bank of India plans to allow local lenders to finance merger and acquisitions, which is expected to increase the country’s $ 40 billion plus agreement market.

Governor Sanjay Malhotra said that after the Central Bank’s interest rates remain unchanged, the Indian Reserve Bank in Mumbai in Mumbai would propose a framework that enables banks to finance the company’s transfer directly.

The proposed relaxation in the rules was part of a series of measures described by the RBI. In addition, he plans to remove regulatory ceilings to lend the listed debt securities and to increase the limits of lending against stocks. The movements increased the Nifty Bank index by 1.4% to trade at the highest level of the day.

The announcement comes at a time which is fueled by healthier balance sheets, years of debt reduction and strong domestic demands, where merger and purchasing in India are increasing. The data compiled by Bloomberg News shows, local merger and purchasing volume reached approximately $ 41 billion in 2025, a slight development compared to the previous year.

Malhotra, in a press conference when asked about alleviating in bank arrangements, “The aim is to encourage stability, to increase competitiveness, to encourage and improve the growth of the economy,” he said.

Currently, lenders are prohibited from direct financing purchases due to concerns about regulatory and asset quality. Most companies typically turn to non -bank financial companies, foreign lenders or public and private markets.

India’s banking sector has been subjected to a major bad loan in recent years, and existence rates that did not perform gross performance have fallen to multi -year low levels.

Analysts expect foreign banks to be affected by the new offer. Bharat Gupta, the founder of Au-Range Ventures, a research services company, said, “If the RBI allows state banks to finance high-grade merger and acquisition agreements, public sector banks will receive a share of foreign banks that provide more benefits than this regulatory arbitrage.”

In addition to other measures, Malhotra said that the final guidelines would reduce the proposed boundaries for the coincidence between banks and group organizations and will give the boards the freedom to decide on strategic allocation.

He said that the expected loan loss framework was proposed to be applied to the loans as of April 1, 2027 and that there was a five -year shift for the application. In January 2023, the Central Bank issued a discussion certificate of discussion that proposes the transition of banks to ECL method, where lenders were not as assumed as the current norm, but evaluated the possibility of default and default.

With the help of Antony.

This article was created from an automatic news agency feeding without changing the text.