Indian banks have financed about 12 merger and acquisition deals involving more than ₹100 billion in acquisition funding since a new Reserve Bank of India (RBI) framework took effect July 1, The Economic Times reported Oct. 22, citing people familiar with the transactions.
The newspaper also cited an unnamed industry estimate that the potential market is nearly ₹2 trillion. Neither the deal total nor the market estimate is an official banking-system tally.
Under the RBI directions, a bank may lend up to 75% of an acquisition value it assesses independently. The buyer must provide the rest from its own funds. The rules cover Indian nonfinancial companies seeking strategic control of nonfinancial targets in India or abroad. Eligible buyers need net worth of at least ₹500 crore and after-tax profits in each of the previous three consecutive financial years. Unlisted buyers must also have an investment-grade rating of at least BBB-. Banks could adopt the rules in full before July 1.
The framework opened a bank-financing route in a market where companies had also used cash on hand, private-credit firms, nonbank lenders, overseas banks and equity fundraising to fund acquisitions, Business Standard reported in July.
Kotak Mahindra Bank head of corporate and transaction banking Anu Aggarwal told The Economic Times, “Demand for acquisition financing is picking up.” The newspaper also reported that Kotak sees opportunities to offer related escrow accounts, demat services and foreign exchange. Financial Express reported in July that banks’ entry could increase competition for private-credit providers, a possible effect rather than a confirmed outcome.
An early example came before the framework’s effective date. Waaree Renewable Technologies completed its purchase of a 55% stake in Associated Power Structures on June 18, reporting consideration of about ₹1,225 crore. HSBC said it funded the transaction; the RBI directions allowed banks to adopt the framework early.
The Economic Times also listed Crystal Crop Protection’s proposed acquisition of FMC Corporation’s India business among transactions involving bank financing. FMC said in May it expected the $252 million sale to close by year-end 2026, subject to conditions. The Competition Commission of India approved Crystal Crop’s acquisition of all of FMC India on Sept. 29.
