SBI Seeks RBI Nod for Bank Financing of Acquisitions
Why in the news
SBI, the largest lender by assets, asked the RBI to permit bank funding of mergers and acquisitions (M&A).
Key facts
- Today banks cannot lend directly for M&A; firms turn to NBFCs or bonds.
- Chairperson Challa Sreenivasulu Setty proposed it at least for large, listed companies.
Significance
- More liquidity for big deals; less reliance on NBFCs and foreign lenders; stronger domestic credit markets.
M&A basics
| Term | Meaning |
|---|---|
| Merger | Two companies join into a new entity, e.g. Vodafone Idea Ltd |
| Acquisition | One company buys and takes over another |
Exam angle
- Requester: SBI; regulator: RBI; example merger: Vodafone Idea.