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Informist, Monday, Aug. 25, 2025

MUMBAI – State Bank of India has asked the Reserve Bank of India to allow banks to fund the acquisition of companies, the state-owned lender's Chairman and Managing Director C.S. Setty said Monday. The initial proposal is to fund acquisitions already approved by shareholders to prevent hostile takeovers.

"...we've been requesting the regulator, we'll make a formal request from the IBA (Indian Banks' Association) also, that at least start with some listed companies where the acquisitions are more transparent and are approved by the shareholders," Setty said at the FIBAC 2025 conference organised by the Federation of Indian Chambers of Commerce and Industry and the Indian Banks' Association.

Currently, banks are restricted from lending in order to fund mergers and acquisitions, leading to purchasers approaching the bond market or funding the transaction through non-bank financial companies. Setty referred to incidents in the past in which the ability to fund such transactions has been misused, and said introducing the ability for shareholder-approved deals could prevent such misuse of bank funding.  End

Reported by Aaryan Khanna and J. Navya Sruthi

Edited by Avishek Dutta

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