The Reserve Bank of India has given banks, brokers and industry a three-month breathing space. The apex lender pushed the implementation of its new Amendment Directions on Capital Market Exposures, originally set to kick in from April 1, to July 1, 2026.
RBI stated that the deferral was after receiving a wave of representations from banks, capital market intermediaries and industry associations flagging operational difficulties and seeking clarifications.
The rules in question were finalised by the RBI on February 13, 2026, following a public consultation process. They were designed to do three things: create an enabling framework for banks to finance acquisitions by Indian companies, rationalise the limits on how much banks can lend to individuals against securities (such as shares, units of REITs and InvITs), and introduce a cleaner, principles-based approach to lending to capital market intermediaries (CMIs such as stockbrokers, clearing members and the like).
The RBI is expected to use the 3-month window to sharpen and clarify several provisions in the rules, issuing a set of Revised Amendment Directions across nine regulatory instruments covering both commercial banks and small finance banks.
On acquisition finance, the clarifications are substantial. The definition has been widened to include mergers and amalgamations, not just buyouts. Banks can only extend acquisition finance for acquiring control over non-financial target companies.
If the target is a holding company with subsidiaries, the "potential synergy" test must be satisfied collectively across the group. Corporate guarantees from the acquiring company are mandatory when finance is extended to a subsidiary or special purpose vehicle.
Going forward, refinancing of acquisition finance is only permitted once the acquisition is fully concluded and control is firmly established.
On loans to individuals against securities, the RBI issued a key clarification on individual borrowing caps. It will be ₹1 crore against eligible securities and ₹25 lakh for IPO/FPO/ESOP financing at the banking system level. This meant the cap applies across all banks combined, not per bank.
For CMIs, the RBI had removed the earlier prohibition on financing market makers against the very securities they make markets in, provided it is backed by 100 per cent cash collateral.
Nine revised directions have been issued in all, covering commercial banks and small finance banks across credit facilities, concentration risk, capital adequacy, financial statement disclosures and undertaking of financial services. READ these revised notifications HERE.
