The Reserve Bank of India (RBI) has postponed the implementation of its revised capital market exposure framework by three months, changing the effective date to July 1, 2026, from the previous deadline of April 1.
The decision comes after comments from the banks, capital market intermediaries (CMI)and industry bodies, which highlighted the operational and interpretation challenges in implementing the new standards.
The central bank had initially issued the amending instructions on February 13, 2026, following a public consultation.
The RBI has also issued specific clarifications in areas such as acquisition financing, loans against financial assets and credit exposure to CMI.
Under the revised framework, the scope of acquisition financing has been expanded to explicitly include mergers and amalgamations, removing ambiguity around its eligibility. However, such financing will be permitted only to acquire 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 potential synergy requirement is met across all subsidiaries and not just at the parent company level.
The new framework also allows companies to channel acquisition financing through Indian or foreign subsidiaries.
At the same time, refinancing rules have been tightened. Banks may refinance loans for acquisitions only after the transaction is completed and control has been established, and such refinancing must be used only to repay the original acquisition debt.
Furthermore, when acquisition financing is granted to a subsidiary or a special purpose vehicle (SPV)A corporate guarantee from the acquiring company will be mandatory, which will reinforce credit safeguards.
For lenders, the deferral provides additional time to align systems and processes with the revised standards, while clearer definitions are expected to reduce legal ambiguity and structuring risks.
For acquirers, the framework expands access to acquisition financing by including mergers and subsidiary-led deals, but also imposes limits by allowing financing only for control-oriented acquisitions and introducing stricter conditions for refinancing.
For capital market intermediaries, the RBI has provided operational relief by allowing bank financing for proprietary trading against 100 per cent cash or cash equivalent collateral. It has also removed restrictions on funding market makers with the same securities used for market making activities.
