RBI’s Strategic Policy Shift

For years, Indian banks were restricted from financing corporate acquisitions, allowing NBFCs, AIFs, and offshore lenders to dominate the M&A funding landscape. The rationale was caution: acquisition loans were viewed as complex, potentially risky, and hard to regulate within traditional banking frameworks.

That’s now changing. In its October 2025 monetary policy, the Reserve Bank of India (RBI) has proposed an ‘enabling framework’ to allow banks to finance acquisitions done by Indian corporates – a move that could reshape India’s dealmaking ecosystem and deepen the country’s financial architecture.

The announcement reflects the regulator’s growing confidence in the maturity of India’s credit ecosystem. The implications are significant: a likely upsurge in M&A activity, accelerated sectoral consolidation, and broader access to capital across industries such as infrastructure, manufacturing, healthcare, and financial services.

For banks, the move opens a high-potential but demanding lending vertical. It calls for developing specialized execution capabilities, right from deal underwriting and post-acquisition cash-flow monitoring, to covenant structuring and sponsor due diligence. Banks that invest early in these capabilities will define the next phase of India’s acquisition finance market.

For investors, the move expands the spectrum of participation by enabling strategic M&A to be financed through bank credit. It also significantly widens the landscape of investable structures and return profiles available. Over time, we may witness a strengthening of the interplay between private capital and bank lending, fostering hybrid models that align strategic control with disciplined leverage.

At Srishti Capital Advisors, our focus is on helping clients navigate these shifts thoughtfully by structuring transactions in a way that balances ambition with prudence and channels capital towards long-term value creation.

If implemented with discipline, this policy shift could redefine how capital, credit, and strategy intersect by shaping a more resilient foundation for India’s corporate evolution.