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The RBI guidelines, introduced after a consultative process, aim to provide a structured framework for domestic banks to finance acquisitions.
The RBI said refinancing of acquisition finance can be undertaken only after the acquisition is fully completed and control of the target company has been established.
The Reserve Bank of India (RBI) has postponed the implementation of its capital market exposure norms for banks by three months to July 1, 2026, following feedback from stakeholders. It also eased certain provisions after industry feedback amid heightened volatility linked to the Iran conflict.
The central bank also said it has revised its ‘Amendment Directions on Capital Market Exposures’ framework, which was originally issued on February 13 as part of a broader effort to streamline lending norms linked to capital markets and acquisitions.
The guidelines, introduced after a consultative process, aim to provide a structured framework for domestic lenders to finance acquisitions.
“On a review, based on further discussions with the stakeholders and on a review, it has been decided to extend the effective date of the said Amendment Directions by three months to July 1, 2026,” the RBI said on its website.
The rules were originally scheduled to come into effect from April 1.
What has changed
Among the key revisions, the RBI has expanded the definition of acquisition finance to explicitly include mergers and amalgamations. It also clarified that such financing will be limited to the acquisition of non-financial entities.
In addition, acquiring companies will now be allowed to raise acquisition finance for onward lending to subsidiaries — both in India and overseas — for the purpose of acquiring a target company.
The RBI also laid down conditions around refinancing. It said refinancing of acquisition finance can be undertaken only after the acquisition is fully completed and control of the target company has been established.
Such refinancing, it clarified, must be used strictly for retiring the original acquisition finance debt.
Further, the rules introduce caps on loans against securities across the banking system. Lending is limited to Rs 10 lakh per individual and Rs 25 lakh for IPO financing, with safeguards to prevent borrowers from availing these limits from multiple lenders.
Also, in cases where acquisition finance is extended to a subsidiary or a special purpose vehicle (SPV), the acquiring company will be required to provide a corporate guarantee.
Until the new deadline, brokers will be allowed to continue using bank guarantees backed by 50 per cent margin. However, key proposals under the framework remain unchanged.
The central bank also relaxed capital adequacy requirements for banks issuing payment commitments to stock exchange clearing corporations by narrowing the exposure on which capital needs to be maintained.
Broader objective of the framework
The central bank said the framework is also aimed at rationalising lending limits by banks to individuals against financial instruments such as shares, REIT units and InvITs.
It also seeks to introduce a more principle-based approach for lending to capital market intermediaries (CMIs), ensuring greater clarity and risk management in such exposures. Banks can now extend funding backed by 100 per cent cash or cash-equivalent collateral. The RBI has also removed restrictions on financing market makers against securities in which they operate.
The deferment is expected to give banks and other stakeholders additional time to align their systems and processes with the revised norms.
“It is good that RBI has delayed implementation of these rules as there is a lot of volatility anyway due to the Iran war,” said Even Choksey, managing director at DRChoksey FinServ, told Bloomberg. “This will give some breather to prop traders and other participants, and hopefully help in calming nerves.”
(With inputs from agencies)
March 31, 2026, 12:31 IST
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