India's central bank has raised the limit on acquisition financing to 75% of deal value, a significant shift that could energize the country's $40 billion plus mergers and acquisitions market. The Reserve Bank of India's decision allows lenders to provide more substantial funding for corporate takeovers, potentially unlocking larger transactions and accelerating deal activity.

Previously, financing constraints had limited the scope of acquisitions, with banks typically capping loans at lower percentages of deal value. This move addresses a key barrier for companies seeking to expand through acquisitions, particularly in a competitive market where valuations have been rising. The policy change comes as India's deal-making environment has been gaining momentum, with both domestic and international investors eyeing opportunities in the world's fastest-growing major economy.

The expanded financing capacity is expected to benefit a wide range of sectors, from technology and manufacturing to consumer goods and infrastructure. By enabling larger transactions, the central bank aims to support corporate growth strategies and enhance India's attractiveness as an M&A destination. This policy shift signals the regulator's confidence in the banking sector's ability to manage increased exposure to acquisition financing while maintaining financial stability.