State Bank of India Chairperson Challa Sreenivasulu Setty
| Photo Credit:
SHASHANK PARADE
State Bank of India (SBI) can provide acquisition financing support of up to ₹94,000 crore to India Inc, going by the Reserve Bank of India’s Amendment Directions for Commercial Banks on Credit Facilities, according to Chairman Challa Sreenivasulu Setty.
As per the directions, banks can provide acquisition financing to Indian companies, listed as well as unlisted, of up to 20 per cent of their tier-1 capital. Total bank financing cannot exceed 75 per cent of the acquisition value.
Speaking to reporters on the sidelines of the Indian Banks’ Association’s 78th annual general meeting, Setty said initially, SBI will tread the acquisition financing space in a calibrated manner, beginning with listed companies. The bank will be taking up the standard operating procedures to the Board for its approval.
Further, India’s largest bank is in talks with Japanese banks to jointly bankroll acquisition financing.
As per the amendment directions, banks have put in place a Board approved policy on acquisition finance, suitably incorporating the underwriting benchmarks that address the structural complexities of such transactions, in particular relating to exposure limits, equity contribution, leverage multiples, and cash-flow certainty.
A few months back, Setty observed that SBI has experience in acquisition financing in the overseas markets. So, it will leverage on this experience to build an acquisition financing portfolio in India.
According to SBI’s Economic Research Department, M&A deals in FY24 were valued at over $120 billion (₹10 lakh crore). Assuming debt component of 40 per cent of M&A and 30 per cent of this could be financed by banks, this translates into a potential credit growth of ₹1.2 lakh crore.
Published on February 20, 2026
