Why RBI's Acquisition Financing Reform Marks A Structural Shift In Indian Banking

RBI Allows Banks To Finance Corporate Acquisitions: A Landmark Shift In India’s Credit Ecosystem

In a historic change of policy, the Reserve Bank of India (RBI) has allowed banks to finance corporate acquisitions under prudential norms through its Developmental and Regulatory Policies statement dated October 1, 2025. This has major legal, financial, and business effects on India’s credit system. Indian banks used to not be able to give loans for equity purchases or leveraged buyouts because they were worried about asset-liability mismatches…

Why RBI's Acquisition Financing Reform Marks A Structural Shift In Indian Banking

The Reserve Bank of India’s statement on Developmental and Regulatory Policies dated October 1, 2025, represents a significant regulatory development with far-reaching legal and commercial implications. By allowing banks to finance corporate acquisitions, subject to prudential norms, the RBI has addressed a long-standing gap in India’s credit ecosystem. Previously, banks were largely prohibited from providing loans for equity acquisitions or lev…