Transparent Approach to M&A Funding

Shetty clarified that the intent is not to support hostile takeovers, but to enable banks to fund
acquisitions in a transparent and shareholder-approved manner. Currently, RBI restrictions keep
banks away from financing M&A deals to avoid risks of forced acquisitions.

Corporate Investment Needs

The SBI chief noted that the domestic corporate sector is financing capital expenditure mainly through
internal resources, equity, and debt markets. While government reforms—including GST rationalisation
and income tax exemptions—are expected to boost consumption, companies should start investing in
capacity expansion now to prepare for rising demand.
“If demand revives sharply, corporates may not have enough production capacity ready,” he warned.

Role of Banks and Markets

Shetty stressed that both capital markets and debt markets, along with the banking system, are well
placed to support corporate investment. He also highlighted that banks are prioritising
customer service improvements, stronger cybersecurity, and financial support for MSMEs.
Lending to the MSME sector grew by 19% year-on-year to Rs. 5.28 lakh crore in
April–June (Q1) this year, reflecting the sector’s growing importance in the economy.

Balanced Growth Path

According to Shetty, India’s growth strategy requires both government-driven consumption measures and
private sector-led capacity expansion. Allowing banks to fund well-regulated M&A activity
would create new opportunities while safeguarding against misuse, he added.