The central bank issued the final amendment directions on 13 February 2026 following a public consultation. These directions were aimed at creating a more enabling framework for bank financing of acquisitions by Indian corporates, rationalising lending limits against financial assets such as shares and units of REITs (real estate investment trusts) and InvITs (infrastructure investment trusts), and introducing a principle-based approach for lending to CMIs.
However, stakeholders raised concerns over certain aspects that required further clarity, prompting RBI to revisit the framework. Following additional consultations, the banking regulator has not only extended the implementation timeline but also issued important clarifications across key areas, including acquisition finance, loans against financial assets and bank exposure to market intermediaries.
On acquisition finance, RBI has broadened the definition to explicitly include mergers and amalgamations. It has been clarified that such financing can be extended only to acquire control over a non-financial target company. When the target is a holding company with subsidiaries, banks must ensure that the ‘potential synergy’ condition is satisfied on a consolidated basis.
The revised framework also allows acquiring companies to raise funds for onward lending to subsidiaries, both domestic and overseas, to complete acquisitions. At the same time, refinancing of acquisition loans will be permitted only after the acquisition process is fully completed and control has been established, and such refinancing must be used strictly to retire the original acquisition debt. Additionally, banks will be required to obtain a corporate guarantee from the parent entity for loans extended to subsidiaries or special-purpose vehicles (SPVs).
In a significant clarification on loans against financial assets, RBI has stated that caps of ₹1 crore per individual for loans against eligible securities and ₹25 lakh for IPO (initial public offering), FPO (follow-on public offering) and ESOP (employee stock ownership plan) subscriptions will apply at the banking system level rather than at the level of individual banks. This is expected to prevent borrowers from exceeding prescribed limits by leveraging multiple banking relationships.
With regard to credit facilities for CMIs, RBI has permitted banks to fund proprietary trading activities only against 100% collateral in the form of cash or cash equivalents, reinforcing a conservative approach to risk. It has also removed the earlier restriction on financing market-makers against the same securities in which they undertake market-making activities, thereby providing greater operational flexibility.
Further, intra-day funding provided to non-debt mutual funds, backed by assured same-day receivables such as maturity proceeds of government securities, treasury bills, state development loans or interest income, will not be classified as capital market exposure. This carve-out is expected to ease liquidity management for mutual funds without adding to banks’ exposure limits.
The deferment, along with these targeted clarifications, reflects RBI’s attempt to balance regulatory tightening with practical implementation concerns. While the revised framework is intended to strengthen risk management and transparency in bank lending to capital markets, the extension provides stakeholders additional time to align their systems and processes with the new requirements.
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