New Delhi, March 31: The Reserve Bank of India (RBI) has extended the deadline for implementing its revised capital market exposure rules by three months. The new effective date is now July 1, 2026, instead of the previously scheduled April 1.
This decision follows feedback from banks, capital market intermediaries (CMIs), and industry organizations, which highlighted operational and comprehension challenges in applying the new regulations.
The RBI initially released a draft of these rules on February 13, 2026, after which public consultations were conducted.
The new regulations clarify aspects related to acquisition financing, loans against financial assets, and credit exposure to CMIs. They now include mergers and amalgamations within the scope of acquisition finance, eliminating previous ambiguities. However, financing will only be available for cases where the goal is to gain control over a non-financial company.
If the target company is a holding entity, banks must ensure that potential benefits (synergies) are evident across all its subsidiaries, not just the parent company.
Under the new rules, companies are also permitted to obtain acquisition financing through Indian or foreign subsidiaries.
Additionally, refinancing rules have been tightened. Banks can only refinance acquisition loans once the deal is finalized and control over the company is established. Furthermore, the funds can only be used to repay existing acquisition loans.
Moreover, if acquisition financing is provided to a subsidiary or special purpose vehicle (SPV), a corporate guarantee from the acquiring company will be mandatory, enhancing banks’ security.
This decision grants banks additional time to adjust their systems and processes to align with the new regulations. The clarity provided by these rules is expected to reduce legal disputes and risks.
For investing companies, this framework opens new avenues for acquisition financing while simultaneously imposing limits through control-based investments and stringent refinancing rules.
The RBI has also offered some relief to capital market intermediaries. Banks can now fund proprietary trading against 100% cash or cash-like collateral. Additionally, restrictions on financing against securities used for market-making activities have been lifted.
My name is Bhupendra Singh Chundawat. I am an experienced content writer with several years of expertise in the field. Currently, I contribute to Daily Kiran, creating engaging and informative content across a variety of categories including technology, health, travel, education, and automobiles. My goal is to deliver accurate, insightful, and captivating information through my words to help readers stay informed and empowered.
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