New Delhi, March 31
The Reserve Bank of India has deferred the implementation of its revised capital market exposure framework by three months, changing the effective date to July 1, 2026, from the earlier April 1 deadline.
The decision comes after feedback from banks, capital market intermediaries (CMIs), and industry bodies, which highlighted operational and interpretational challenges in implementing the new norms.
The central bank had initially issued the amendment directions on February 13, 2026, following public consultation.
The RBI has also issued targeted clarifications across areas such as acquisition finance, loans against financial assets, and credit exposure to CMIs.
Under the revised framework, the scope of acquisition finance has been expanded to explicitly include mergers and amalgamations, removing ambiguity around their eligibility. However, such financing will be permitted only for acquiring control of a non-financial target company, indicating a focus on control-driven transactions rather than minority investments.
In cases where the target entity is a holding company, banks will need to ensure that the requirement of potential synergy is met across all subsidiaries and not just at the parent level.
The new framework also allows companies to route acquisition finance through Indian or overseas subsidiaries/
At the same time, refinancing norms have been tightened. Banks can refinance acquisition loans only after the transaction is completed and control has been established, and such refinancing must be used solely to repay the original acquisition debt.
Further, where acquisition finance is extended to a subsidiary or a special purpose vehicle (SPV), a corporate guarantee from the acquiring company will be mandatory, strengthening credit safeguards.
For lenders, the deferment provides additional time to align systems and processes with the revised norms, while clearer definitions are expected to reduce legal ambiguity and structuring risks.
For acquirers, the framework broadens access to acquisition finance by including mergers and subsidiary-led deals, but also imposes limits by allowing funding only for control-oriented acquisitions and introducing stricter conditions on refinancing.
For capital market intermediaries, the RBI has provided operational relief by permitting bank funding for proprietary trading against 100 per cent cash or cash-equivalent collateral. It has also removed restrictions on financing market makers against the same securities used for market-making activities.
- IANS
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