Lifting of curbs on financial institution acquisition financing to assist financial system, says RBI chief

The elimination of restrictions on banks for acquisition financing will assist the actual financial system, Reserve Bank of India Governor Sanjay Malhotra mentioned on Friday (November 7, 2025).

Last month, the RBI allowed banks to fund acquisitions and raised the cap on loans for purchasing shares at IPOs, as a part of a raft of measures to spice up financial institution lending on the planet’s fifth-largest financial system.

“These come as you might be conscious… with guardrails, like limiting financial institution funding to 70% of the deal worth, limits on debt to fairness ratio… which is able to guarantee security whereas permitting banks and their stakeholders to achieve the advantages of extra enterprise,” the RBI chief mentioned.

While talking on the State Bank of India’s Banking and Economics Conclave, Mr. Malhotra mentioned no regulator can or ought to substitute boardroom judgment, particularly in a rustic like India, the place every case, every mortgage, every deposit, every transaction is completely different.

“We want to permit the regulated entities to take selections primarily based on the deserves of every case, quite than prescribing a one measurement match all rule,” he added.

The apex financial institution chief additionally mentioned supervisory actions have enabled an efficient backstop to reasonable or prune unsustainable progress and form a strong, resilient and exquisite banking system.

The RBI has ample instruments, danger weights, provisioning norms, counter cyclical buffers to comprise rising dangers, he added.