https://rbidocs.rbi.org.in/rdocs/notification/PDFs/NT211F12FDDD2ACA0486D81FD5AD3CC5E0E61.PDF
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Acquisition Finance (Banks Funding Buyouts)
| Aspect | Before (2025 Master Directions) | After (2026 Amendment) |
|---|---|---|
| Whether banks allowed structured domestic acquisition finance | No comprehensive structured framework. Chapter XI covered PSU disinvestment, promoter contribution, and overseas acquisition only. | Banks can lend for acquisition finance under structured conditions. |
| Who can borrow | No defined general eligibility for domestic strategic acquisitions. | Only non-financial Indian companies |
| Minimum net worth requirement | Not specified | ₹500 crore |
| Profit track record | Not specified | 3 consecutive profit years |
| Unlisted company requirement | Not specified | BBB- or higher rating |
| Max financing as % of deal | Not defined | 75% of acquisition value |
| Borrower’s minimum own contribution | Not defined | 25% own funds |
| Post-deal leverage cap | Not defined | Debt–Equity ≤ 3:1 |
| Related party acquisition | No explicit structured restriction | Restricted |
| Valuation discipline | No structured valuation requirement | Independent valuer(s) mandatory |
Summary:
Before (2025 Directions):
There was no structured framework allowing banks to systematically fund domestic strategic acquisitions. Chapter XI only covered specific cases like PSU disinvestment, promoter contribution financing, and overseas equity acquisitions. There were no defined leverage caps, minimum net worth thresholds, or formal acquisition funding limits.
After (2026 Amendment):
A formal acquisition finance regime is introduced. Banks can fund up to 75% of acquisition value, subject to strict eligibility criteria (₹500 crore net worth, 3 years profitability, BBB- rating if unlisted), a 3:1 post-deal debt-equity cap, mandatory valuation discipline, and related-party restrictions.
Net Effect:
RBI has formally permitted acquisition finance for the first time in a structured way, but with tight leverage and governance controls to prevent excessive buyout risk.
Loans Against Securities (LAS)
| Collateral / Feature | Before (2025 Chapter XIII) | After (2026 Amendment) |
|---|---|---|
| Structure of regulation | Multiple fragmented sections (A–P) covering shares, brokers, margin trading, IPO, etc. | Consolidated under new structured “Eligible Securities” framework |
| Unified LTV table across asset classes | No consolidated LTV grid | Yes – asset-class specific LTV ceilings |
| Listed equity shares LTV | Not prescribed in a consolidated ceiling format | 60% LTV ceiling |
| Equity MFs / ETFs / REITs | Covered separately; no unified cap grid | 75% LTV |
| Debt mutual funds | Covered but no consolidated asset-rating grid | 85% |
| AAA corporate debt | Not structured in unified grid | 85% |
| AA–BBB corporate debt | Not structured in unified grid | 75% |
| Government securities | Allowed but not in unified LAS LTV grid | As per policy (with structured framework) |
| Retail exposure cap | No ₹1 crore uniform cap | ₹1 crore cap (except specified low-risk securities) |
| IPO financing | Covered separately; no ₹25 lakh universal cap | ₹25 lakh cap + 75% funding max |
| Ongoing LTV monitoring rule | Policy-based monitoring | Mandatory ongoing monitoring + 7-day breach correction |
| Explicit prohibited securities list | Limited prohibitions | Detailed prohibited list introduced |
Summary:
Before (2025 Directions):
Lending against shares, mutual funds, bonds, IPOs, and broker exposures was governed through multiple fragmented sections. There was no single consolidated LTV grid across asset classes, no uniform ₹1 crore retail cap, and no explicit 7-day mandatory LTV breach correction requirement.
After (2026 Amendment):
LAS is consolidated into a structured “Eligible Securities” framework with clear LTV ceilings (e.g., 60% for listed equity, 75–85% for other categories), a ₹1 crore retail cap (except low-risk debt), ₹25 lakh IPO financing cap, mandatory ongoing LTV monitoring, and defined prohibited securities.
Net Effect:
RBI has standardised and tightened retail leverage rules, reduced ambiguity, and strengthened monitoring discipline.
Lending to Capital Market Intermediaries (CMIs)
| Feature | Before (2025 Master Directions) | After (2026) |
|---|---|---|
| Dedicated regulation for CMI lending | No standalone chapter. Brokers covered under general LAS & NFB rules. | New Chapter XIII-A introduced |
| Funding proprietary trading | Not explicitly carved out in separate CMI chapter | Explicitly prohibited |
| Collateral requirement | Governed under general exposure norms | 100% collateral generally required |
| Haircut on equity | No explicit minimum haircut floor | Minimum 40% haircut |
| Guarantees to exchanges | Allowed under NFB norms | 50% collateral required (25% cash) |
| Concentration / aggregation rules | Under general Concentration Risk Management framework | Explicit CMI exposure aggregation required |
| Intraday funding | Not separately structured | Allowed under specific conditions |
Summary:
Before (2025 Directions):
There was no dedicated regulatory chapter for broker and intermediary lending. Such exposures were governed under general loans-against-financial-assets and non-fund-based facility rules.
After (2026 Amendment):
A new standalone chapter is introduced for CMIs. It requires 100% collateral (generally), imposes a minimum 40% haircut on equity collateral, restricts proprietary trading finance, and tightens guarantee collateral norms.
Net Effect:
RBI has ring-fenced broker and capital market intermediary leverage, reducing the probability of contagion from capital market stress into the banking system.
What This Means Practically
- Acquisition finance → Newly structured and formally permitted with strict leverage discipline.
- LAS → Standardised, retail-capped, and more tightly monitored.
- CMI lending → Ring-fenced with strong collateral and anti-prop-trading safeguards.