RBI Permits Banks to Finance Mergers & Acquisitions and Extend Rupee Loans to Neighbouring Countries’ Residents

Amid rising trade tensions with the US and criticism of a BRICS currency, the Reserve Bank of India (RBI) announced measures to strengthen financial markets and internationalise the rupee. Key decisions include allowing banks to fund corporate takeovers, a sector previously restricted, and enabling Indian banks and their overseas branches to provide rupee-denominated loans to residents of neighbouring countries like Nepal, Bhutan, and Sri Lanka. These steps signal a strategic shift in India’s financial policy, moving from an inward-focused approach to one aimed at enhancing regional and global influence, expanding the role of banks in corporate consolidation and cross-border financing.