India is planning to open $ 40 Billion M&A Market for Local Bank Finance

India’s central bank plans to enable local lenders to finance mergers and acquisitions, a step that is expected to boost the country’s market for $ 40 billion plus a boost. The Reserve Bank of India will soon represent a framework that enables banks to finance corporate acquisitions directly, Governor Sanjay Malhotra said in Mumbai on Wednesday after the central bank kept interest rates unchanged. The proposed recreation in rules was part of a number of measures announced by the RBI. It also intends to remove regulatory ceilings on lending against listed debt effects and increase limits for lending against shares. The movements rose the Nifty Bank index by 1.4% to trade at the peak of the day. The announcement comes at a time when corporate appetite for M&A in India is increasing, fueled by healthier balance sheets, years of debt reduction and strong domestic demand. The amount of domestic M&A amounted to almost $ 41 billion in 2025, a slight improvement of a year earlier, compiled by Bloomberg News performances. “The goal is to promote stability, while at the same time improving competitiveness, encouraging and improving the growth of the economy,” Malhotra said at a news conference when asked about relieving the regulations. Currently, lenders are prohibited from financeing acquisitions directly due to concerns about regulatory and asset quality. Most businesses usually turn to financial businesses, foreign borrowers or public and private markets. The banking sector in India has undergone a major clearance of bad loans over the past few years, with the gross non-performing asset relationships dropping to lows of the year. Analysts expect foreign banks to be influenced by the new proposal. “If the RBI allows state-owned banks to finance M&A transactions with a high assessment, public sector stocks will take away from foreign banks that benefit more from this regulatory arbitrage,” says Bharat Gupta, founder of AU-RRANGE ventures, a research firm. Malhotra said, among other things, the final guidelines would drop the proposed limits on the overlap of business between banks and their group entities, giving boards the freedom to determine strategic awards. He said the expected credit loss framework is proposed to apply to lenders from 1 April 2027, with a five-year slide for implementation. In January 2023, the central bank released a discussion document suggesting that banks transition to the ECL method, in which borrowers assessed and provided the probability of standard supply, rather than a standard like the current norm. With the help of Anto Antony. © 2025 Bloomberg MP This article was generated from an automatic news agency feed without edits to text.