The regulator said banks are allowed to refinance a target company’s existing debt where such refinancing is “integral to the acquisition finance.”
Borrowers must meet stringent financial criteria, including a minimum net worth of ₹500 crore, three consecutive years of net profit, and-where the acquirer is unlisted-an investment-grade credit rating prior to disbursement.
The regulator also eased the portfolio limit for such lending, raising the bank level cap on acquisition finance to 20% of eligible capital, compared with a proposed 10% of Tier 1 capital in the draft rules.
The limit will apply within the overall capital market exposure ceiling, it said.
The final guidelines are relaxed post consultation with banks and will be effective from April 1, 2026.
The RBI aligned rules for infrastructure trusts, saying that InvIT related acquisition funding must comply with the new acquisition finance framework, linking it to the conditions around control, leverage and security requirements.On retail borrowers, the RBI increased the amount individuals can borrow against shares by raising the cap to ₹1 crore per person from ₹20 lakh earlier. Within this higher ceiling, banks can lend up to ₹25 lakh to individuals specifically for purchasing securities in the secondary market.
Banks can now extend up to ₹25 lakh per individual for subscriptions to initial public offers (IPO), follow-on public offers (FPO) and employee stock option plans (ESOPs), subject to borrowers contributing a minimum 25% cash margin, meaning loans cannot exceed 75% of the subscription value.
For other market instruments, the RBI set specific ceilings: loans against listed debt securities rated BBB or above, mutual fund units, exchange traded funds, and units of REITs or InvITs will follow LTV caps applicable under the new framework, ranging from 60% for listed shares to 85% for high rated debt instruments and 75% for equity oriented funds, ETFs and trust units.