The Reserve Bank of India has issued the Reserve Bank of India (Commercial Banks – Credit Facilities) Amendment Directions, 2026 introducing a comprehensive overhaul of norms relating to acquisition finance, loans against securities, bridge finance, and credit facilities to Capital Market Intermediaries (CMIs).
Under the Reserve Bank of India (Commercial Banks – Credit Facilities) Directions, 2025, provisions relating to acquisition finance, loans against shares/securities, bridge finance and exposure to intermediaries were dispersed across multiple chapters with legacy prescriptions. The framework lacked unified definitions (e.g., acquisition finance, CMIs, eligible securities), detailed LTV-based prudential controls, structured eligibility criteria for acquisition finance, and a dedicated regulatory chapter governing credit facilities to CMIs. This led to varied interpretations and inconsistent risk management practices.
The Amendment Directions introduce wide-ranging structural reforms, including:
Insertion of comprehensive definitions (Acquisition Finance, Bridge Finance, CMIs, Eligible Securities, LTV, Margin, Primary Security, etc.).
A revamped Chapter XI on Acquisition Finance prescribing: eligibility limited to Indian non-financial companies; minimum net worth of ₹500 crore; profitability track record; rating requirement (for unlisted entities); 75% financing cap; 25% borrower contribution; mandatory corporate guarantee; post-acquisition leverage cap (3:1); independent valuation norms; and strict control acquisition conditions.
A new structured framework for Loans Against Eligible Securities with defined LTV ceilings (e.g., 60% for listed shares, 75% for equity mutual funds/REITs/InvITs, 85% for AAA debt), margin monitoring requirements, ₹1 crore cap per individual (other than specified categories), and specific IPO/FPO/ESOP financing norms.
Introduction of a dedicated Chapter XIII A governing Credit Facilities to CMIs, prescribing permissible/prohibited facilities, 100% collateralisation (with specified relaxations), minimum haircuts (40% for equities), restrictions on proprietary trading finance, margin trading safeguards, and detailed guarantee norms.
Rationalisation of infrastructure financing references and alignment with CME computation under the Concentration Risk framework.
The amendments come into force from April 1, 2026 (or earlier if adopted by a bank).
Link – https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=13297&Mode=0
