SBI in talks with Japanese lenders for M&A financing

State Bank of India (SBI) is in talks with some Japanese lenders to partner with them for merger and acquisition (M&A) financing in light of the new norms in that regard, SBI chairman CS Setty told reporters on the sidelines of the Indian Banks’ Association (IBA) annual general meeting. The bank has a lending ceiling of ‘94,000 crore, according to the new rules, Setty said.

“We have been talking to Japanese banks mainly because they’ve been active in that.

But there’s no preference for anyone. Each transaction will bring a set of bankers together. It could be either a relationship, either at the acquisition company or at the target company. Many a time, the banks are identified based on who’s the acquirer, who’s the target,” Setty said, adding that India’s largest lender will soon get a board approval to form a policy on this. Final guidelines announced earlier this month allow Indian banks to finance up to 75% of an acquisition’s cost in any domesti M&A with a 3:1 debt-equity ratio.