IBA to approach RBI for permission to fund M&A of listed entities: SBI Chairman

Mumbai: Indian Banks’ Association (IBA) will make a formal request to the regulator RBI to permit banks to fund mergers and acquisitions of listed companies, State Bank of India (SBI) Chairman CS Setty said on Monday.

He also urged the private sector to commence investment for capacity expansion, as the government has already taken several steps to boost consumption.

“Access to the Indian banks for financing the Mergers and Acquisitions (M&A)... I think we did speak earlier. If you see the historical perspective of this, not funding the acquisitions is based on the hostile takeover.

“To start with, we will make a formal request from the IBA (to the RBI)...at least start with some listed companies where the acquisitions are more transparent and acquisitions are approved by the shareholders. (Thus) the issue of any hostile take over of the funding can be minimised,” said Setty, who is also chairman of IBA.

Speaking at FIBAC 2025, organised by the Federation of Indian Chambers of Commerce and IBA, he said the current capex of the corporate sector is being financed by their internal accruals, equity, and the debt market. He asked the corporate to come forward and make an investment towards capacity enhancement, as consumption is expected to pick up with the government taking steps in that direction.

“Lot of people also say that the capital expenditure will come in a big way, only if there is a sustained demand visibility...lot of efforts are going into structural reforms related with GST rates and income tax exemptions up to Rs 12 lakh. When the demand actually comes back in a big way, the corporate should not be found wanting for the capital expenditure or the capacity availability.

“It is important for the corporate world to start looking at capacity expansion right away, which will definitely be supported both by the capital markets as well as debt markets through the banking system,” he said. Setty further said, the Indian banking sector is focused on enhancing customer service, strengthening cyber security, and deepening financial inclusion.

The SBI chairman also highlighted that banks are increasingly focusing on lending to medium, small, and micro enterprises. The state-owned lender’s small and micro enterprises lending was up over 19 per cent at Rs 5.28 lakh crore in the June quarter.

Banks with high profitability and low levels of non-performing assets are better placed to contribute to economic growth, he said, adding, India is emerging as a global leader with growing influence in geopolitics.