Overview
- The central bank unveiled an enabling framework that permits Indian lenders to fund M&A by domestic corporates, reversing a long-standing constraint.
- RBI scrapped the Rs 10,000 crore large-borrower condition and will rely on macroprudential tools to monitor system leverage.
- Banks must stay within single-borrower and group exposure limits, with close supervisory monitoring, and financial-sector acquisitions are excluded from scope.
- Large lenders plan specialized M&A underwriting teams, and bankers expect initial focus on smaller, lower-risk transactions such as MSME and pharma deals.
- SBI Research estimates a potential incremental credit opportunity of about Rs 1.2 trillion, while private credit funds foresee limited impact given their flexible, niche mandates.