Mumbai, Aug 17: The Reserve Bank of India (RBI) has allowed commercial banks to finance companies to buy stakes being sold off in government firms. In a circular issued late on Friday, the RBI said banks could even finance an open offer by the acquiring company.


The Indian central bank, however, said the borrowing companies and their founders must have adequate net worth and excellent track record of repaying bank loans.

The RBI would consider requests for relaxing the five percent ceiling on banks' exposure to the capital market, in cases where a bank has to breach the limit to finance such a purchase. The RBI usually does not allow banks to finance companies' purchases of shares of other companies. Bureau Report