RBI Banking Reforms: Indian corporates to benefit from cheaper rupee funds for M&A, say experts

The Reserve Bank of India’s recent reforms are set to create new opportunities for Indian banks and corporates, industry experts told CNBC-TV18. Banks can now finance mergers and acquisitions, a move that could provide companies with access to cheaper rupee-denominated funds for strategic growth.

“It’s a great opportunity for banks. I don’t know why there was a stigma of not being able to fund acquisitions earlier,” said Abizer Diwanji, Founder of NeoStrat Advisors. He added that RBI had previously restricted banks to vanilla financing, but the new rules allow for a wider range of structured financing products, including leveraged buyouts. “If we are able to finance it right, this is a great opportunity for Indian banks,” he said.

Harsh Vardhan, Senior Advisor at Bain & Company, called the move “an excellent step” towards creating an efficient market for corporate control. “We should facilitate greater mergers and acquisitions so that our corporates become more efficient. You can’t do that unless funding is available,” he said. Vardhan also noted that the easing of rules around foreign ownership and private equity leverage could further enhance market efficiency.

The RBI has also withdrawn the 2016 framework that had disincentivised lending to specified borrowers, with a system-wide limit of around ₹10,000 crore. According to experts, this will boost credit availability for corporates, particularly those that previously found it difficult to raise funds in the bond market. “The withdrawal of large exposure restrictions will help shift responsibility from regulation to governance at banks, allowing boards to take more strategic decisions,” Vardhan explained.

The reforms come alongside other measures aimed at strengthening credit growth. Loan limits against shares for individuals have been increased from ₹20 lakh to ₹1 crore, while risk weights for select segments have been lowered to reduce capital requirements. Banks are also expected to adapt to the expected credit loss (ECL) framework, which will come into effect from April 1, 2027, with a four-year glide path to manage any impact on provisioning.

Experts said these steps could gradually make funding more accessible for Indian corporates and encourage banks to expand their role in strategic financing. “Indian corporates will now be able to access rupee funds, which are generally cheaper, for acquisitions and growth,” Diwanji said, highlighting the potential long-term impact of the reforms.

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