RBI to permit banks to fund merger & acquisition activity by Indian corporates

MumbaI, October 1 (PTI) to improve the flow of credit on Wednesday, the reserve bank, Indian banks to finance the purchases of Indian companies will provide an activating framework, he said.

This was a long -standing demand of Indian banks. Recently, CS Setty, the President of the Indian State Bank, filed a strong lawsuit to allow banks to provide funds for merger and acquisitions, as they were made by global lenders.

“As a start, we will make an official request from IBA (RBI) … Start with some listed companies that are more transparent and approved by shareholders.

Indian Reserve Bank Governor Sanjay Malhotra, who announced the fourth two -month monetary policy examination, said that it was proposed to provide a framework for Indian banks to finance the purchase of Indian companies and thus expand the scope of banks’ capital market loans.

It is recommended to remove the regulatory ceiling on lending against the debt securities listed and increase the limits of lending against the stocks of banks. La20 Lakh La1 for Crore and public offering La10 Lakh La25 25 Lakh per person, dedi he said.

In addition, he proposed to withdraw the framework that was introduced in 2016 to the borrowers determined by the banks (a credit limit from the banking system of the banks of the banks. La10,000 crore and above).

The large exposure frame for banks discussed the risk of credit concentration for a particular bank level at the individual bank level, while considering that the risk of concentration at the banking system level is necessary, it will be managed by certain macoprudedial vehicles.

In order to reduce infrastructure financing costs for NBFCs, NBFCs proposed to reduce risk weights given to operational, high -quality infrastructure projects.

He also said that the license of Urban Cooperative Banks (UCB) has been paused since 2004.

“Considering the positive developments in the sector in the last twenty years and in response to the increasing demand of the stakeholders, we recommend to publish a discussion certificate about the license of the new UCBs,” he said.