SBI is in talks with Japanese lenders to finance acquisitions

State Bank of Indiathe country’s largest lender is in talks with Japanese lenders to finance mergers and acquisitions, its chairman CS Setty said on Friday. The statement comes a week after the Reserve Bank of India issued financial guidelines on bank acquisition financing.

Setty said that it was typically not possible to finance large acquisitions independently and several banks had to do them together.

« We have also discussed with many banks to cooperate and we have cooperated abroad, except Indian transactions were not allowed. Now we are cooperating. We have discussed with Japanese banks because they have been active in it, » Setty pointed out.

But he clarified that there is no preference and that each transaction brings together a number of bankers.

It could be either a consortium of lenders or preferably a couple of banks working on the deal, with other banks involved in financing, he noted.

The Reserve Bank last week issued guidelines for banks to finance mergers and acquisitions. According to the new rules that will come into effect in the next fiscal year (2026-27), banks can finance a maximum of 75 percent of the acquisition value, while the host entity would have to finance at least 25 percent of the costs with its own funds.

Setty said a lender needs to look at transactions based on risk appetite, and they may not initially go into complex structures. In addition, these principles would have to be approved by the board and would also require a standard operating procedure.

He is waiting for the approval of the banks’ boards in a couple of months.

Separately, Setty said the lender hopes to file paperwork for the listing of its asset management subsidiary by March this year. SBI Mutual Fund is the largest asset manager in the country.

He also said that banks were trying to develop a common lending system under the Indian Banks Association.

« Collaborative lending is a complex arrangement. If you try to do it manually, it’s very cumbersome and you won’t be able to deliver as many loans as possible, » Setty said.