SBI Chairman Challa Sreenivasulu Setty
As the volume of merger and acquisition (M&A) deals increases domestically, the regulator must consider allowing Indian banks to finance such transactions, said State Bank of India (SBI) Chairman CS Setty at the FIBAC event held here on Monday.
“We have been asking for quite some time access for Indian banks to finance M&As,” he said, adding that lenders have been appealing to the regulator via banks’ lobby group to at least consider allowing financing M&A deals conducted by listed corporates where there is more transparency.
Setty said that of late, corporate funding has shifted towards capital markets and private credit. But there are long-term financial requirements, so banks will have to step up for the next wave of long-term capex, which is essential for India’s growth ambition.
“Deleveraging has taken place in the corporate sector, and companies now hold significant cash balances. Our internal estimates put cash availability at ₹13.5 trillion, which means capex expansion, brownfield investments, ongoing capex, most are being met through internal resources. While many corporates have strong capex plans, these may not fully crystalise into corporate credit, as they either have access to capital markets or robust internal funds.” he said.
Private credit
According to a report by E&Y, India’s private credit market saw a sharp surge in deal activity. Total private credit deployment touched $9 billion across 79 deals (deal size above $10 million) in H12025, a 53 per cent rise over H12024, and nearly 3x of H22024 levels.
However, a single landmark deal — Shapoorji Pallonji Group’s $3.14 billion transaction — made a huge percentage of the total deal amount. Excluding this, deal flow still reflected healthy momentum, driven by stable interest rate expectations and gaps left by banks in sectors like infrastructure and real estate. Global funds remained the dominant players in the private credit market, while domestic funds focused on mid-market and opportunistic deals.
The infrastructure sector got the highest allocation from the private credit funds followed by the real estate and healthcare sectors. Banks’ loans to the large corporates, meanwhile, moved up by just 6 per cent in the past two years, the report said.
Published on August 25, 2025
