RBI eases acquisition‑finance rules

The Reserve Bank of India (RBI) has announced new guidelines easing acquisition financing rules for banks, allowing them to support companies seeking to increase their stakes in target firms. Companies that already possess control and wish to raise their stakes from 26% to 90% can now access acquisition financing. Additionally, banks are permitted to refinance the existing debts of target companies, provided this is essential to the acquisition process. Borrowers seeking these funds must meet rigorous financial standards, including a minimum net worth of Rs 500 crore and a history of three consecutive years of net profit. The RBI has also raised the portfolio limit for acquisition financing from 10% to 20% of eligible capital, effective from April 1, 2026. Furthermore, the guidelines extend to infrastructure trusts, linking acquisition funding to compliance with new financial requirements. In a move to boost retail borrowing, the RBI has increased the borrowing limit against shares to Rs 1 crore, up from Rs 20 lakh, and introduced specific lending caps for subscriptions to IPOs and other market instruments, which will adhere to outlined loan-to-value ratios. These adjustments follow consultations with the banking sector and are aimed at enhancing liquidity and investment opportunities in the market.