SBI Eyes Acquisition Finance Tie-up with Japanese Banks

State Bank of India (SBI) is negotiating with Japanese lenders to collaborate on the acquisition finance business after the Reserve Bank of India (RBI) recently allowed domestic banks to enter this lucrative sector.

In a significant development, the country's largest lender, SBI, can now extend up to Rs 94,000 crore in financing to borrowers interested in acquisition finance, as highlighted by Chairman C S Setty at an IBA event. The RBI's guidelines, effective from February 13, permit banks to fund up to 75% of a transaction, with a total exposure cap of 20% of the bank’s core capital.

SBI's ongoing talks with Japanese banks reflect possible international collaboration, especially given Japan's active role in the sector. However, SBI intends to prioritize simpler equity and debt finance transactions, moving cautiously in the new domestic landscape. Concurrently, SBI Mutual Fund is gearing up to file for its IPO by March, aiming for a listing by September.