Mumbai, Oct 25: The Reserve Bank of India (RBI) has proposed allowing banks to finance corporate acquisitions with stricter safeguards.

The proposal allows banks to extend loans to Indian companies for acquiring full or controlling stakes in domestic or overseas firms as part of strategic investments aimed at creating long-term value.

Up to 70% of the acquisition cost may be financed by banks, with the remaining 30% coming from the acquiring company’s equity contribution.

The proposal also requires a thorough policy framework on acquisition finance, including borrower eligibility, security, margins, risk management, and monitoring procedures.

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