RBI 'Sensitive Sector' Norms May Hinder Bank M&A Financing

Imagine banks are like grown-ups who have a piggy bank for saving money.

The government has rules about how much money banks can put into certain types of 'risky' savings jars, like those for buying stocks or property – these are called 'sensitive sectors.'

Currently, banks can only put a small amount (5%) of their saved money into these jars each year.

But now, banks want to help big companies buy other companies (this is called M&A financing), which needs a lot of money.

Bankers are saying that the small limit for 'sensitive sector' jars isn't enough for this big new job.

They want the government to think about changing the rules so they can use a bit more money from their piggy banks for this M&A helping-hand, or the deals might be too expensive to do.