Draft RBI Directions: Banks may finance Acquisitions
– Conditions for acquisition finance, prudential limits and new LTV requirements for various capital market exposures
– Payal Agarwal, Partner | payal@vinodkothari.com
The Amendment Directions have been issued by RBI effecting changes as per the draft norms. See an article on the same here – https://vinodkothari.com/2026/02/rbi-permits-leveraged-buy-outs-through-bank-finance/
Capital markets are subject to higher fluctuations and volatility, and hence, Capital Market Exposures (CME) carry a higher risk, naturally requiring higher level of control and prudential norms by the regulator. The RBI recently released Draft Reserve Bank of India (Commercial Banks – Capital Market Exposure) Directions, 2025, consolidating and amending the regulatory directions pertaining to CMEs. The proposed amendments are significant, providing for a flexibility of financing “acquisitions” in the secondary market while also strengthening the prudential requirements in relation to CMEs.