New Delhi: State Bank of India (SBI), the country’s largest lender, has requested the Reserve Bank of India (RBI) to allow banks to fund acquisitions, SBI Chairperson Chaila Sreenivasulu Setty said on Monday.

Currently, Indian banks are not permitted to provide loans for mergers and acquisitions. As a result, companies typically turn to non-banking financial institutions or raise funds through bonds when planning to acquire other businesses.

Speaking at the FIBAC event organised by FICCI and IBA, Setty said SBI has asked the RBI to consider allowing acquisition financing, at least initially for large listed companies.

The request comes as public sector banks (PSBs) report strong profits and improved balance sheets. Together, the 12 PSBs posted a record net profit of ₹44,218 crore in the April–June quarter (Q1) of FY26, up 11 per cent from the same period last year. SBI alone contributed 43 per cent of this, with a net profit of ₹19,160 crore, marking a 12 per cent rise over Q1 FY25.

Over the past three financial years (FY23 to FY25), PSBs also raised nearly ₹1.54 lakh crore through equity and bonds to bolster their capital base and support credit growth.

The Finance Ministry is scheduled to review PSBs’ performance this week, focusing on their financial health and growth outlook.

If the RBI approves SBI’s proposal, it could provide a new funding avenue for Indian companies seeking to expand through acquisitions.

 

 

IANS inputs