Athira Sethu
Kochi, 2 April 2026
The Reserve Bank of India (RBI) has delayed its new rules regarding lending for acquisitions. The rules will now start from July 1, 2026, instead of earlier. This decision has been made after the RBI discussed it with banks and people who will use these rules.
The RBI first announced its rules in February. These rules would have allowed Indian banks to lend money to firms looking to acquire other firms. After hearing from banks and people regarding these rules, the RBI has made some changes in these rules and has extended the deadline for banks.
The revised rules have defined the term “acquisition finance.” This term now includes mergers and combinations of firms. Indian banks can give loans for acquiring non-financial firms, not any firm. Firms can also use these loans to give money to their subsidiaries in India and abroad for acquiring a company.
A company can refinance its acquisition loan after it has completely acquired the company and has control over it. The RBI has said that the company can refinance its loan by paying the previous loan.
When the loan is offered to the subsidiary or a special company formed specifically for the purchase, a corporate guarantee has to be provided by the parent company. This implies that the parent company will pay back the loan in case the subsidiary fails.
Other objectives of these rules include providing a framework for the amount of loans offered against shares or units of investment trusts and developing more simple and principle-based rules for banks offering loans to capital market firms.
The RBI claims that these changes will make it easier for the rules to be followed and for them to be safer for banks. It will also help firms in better planning for acquisitions while keeping the banking system strong.
Essentially, banks have better clarity on lending for the purchase of firms. Similarly, firms have better clarity on the rules for refinancing and guarantees. This delay will give everyone more time to prepare for the implementation of the rules, which will be from July 1, 2026.
These steps are part of RBI’s initiatives in making lending safer, helping businesses grow, and strengthening the capital market. This will clarify the loans banks can offer and the requirements for lending and refinancing.
