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RBI Final Norms: Bank Loans for Corporate Acquisitions

14 February 20261 min read
BANKING & FINANCERBI Final Norms:Bank Loans forCorporateAcquisitions14 February 2026safalsetu.com

Why in the news

The Reserve Bank of India released final rules letting banks lend for takeovers of non-financial companies, with safeguards for prudent lending and long-term value.

Key facts

  • Funding up to 75% of acquisition value, also via non-financial subsidiaries or step-down SPVs.
  • Acquirer must gain control within 12 months; acquirer and target cannot be related parties.
  • If control already exists, funding only as holdings cross 26%, 51%, 75% or 90% voting rights.

Eligibility and safeguards

ItemRequirement
Net worthAt least ₹500 crore
ProfitsNet profit in each of last 3 years
Unlisted acquirerRating BBB- or above
Own fundsAt least 25% of the deal
GuaranteeCorporate guarantee mandatory
LeverageConsolidated debt-to-equity up to 3:1
Unlisted targetLower of two independent valuations
Bridge loanSecured; replace with equity within 12 months

Change from draft

  • Draft limit of 10% of Tier-1 capital on exposure was dropped.

Exam angle

  • 75% funding cap, ₹500 crore net worth, 3:1 leverage.

Test yourself

1. What share of an acquisition's total value can banks finance under RBI's final norms?

Banks may fund up to 75% of total acquisition value.

2. What minimum net worth must an acquiring company have under RBI's acquisition-finance norms?

The eligibility criterion is net worth of at least ₹500 crore.

3. What is the cap on post-acquisition consolidated debt-to-equity ratio in RBI's norms?

Post-acquisition debt-to-equity is capped at 3:1.