RBI may allow banks to finance corporate acquisitions
Big update from the Reserve Bank of India: they're looking to let banks finance up to 70% of the cost when companies buy other companies—a major shift from the old "no bank loans for acquisitions" rule.
To qualify, a company needs to be listed, profitable for three years, and have satisfactory net worth.
The buyer still has to chip in at least 30% with their own money.
Potential impact and regulatory safeguards
If these rules go through, it could make mergers and acquisitions a lot more doable for Indian companies—think increased M&A activity or big brands growing faster.
But RBI isn't just opening the floodgates: loans must be backed by shares, deals need two independent valuations (as per SEBI), and related-party deals are out.
Plus, there are strict checks like a max debt-to-equity ratio of 3:1 and limits on how much any one bank can risk.
So while this could shake up India's business scene, RBI wants growth without risking financial stability.