RBI drafts rules for banks to finance strategic buyouts
The RBI is rolling out draft rules to let banks finance Indian companies' acquisitions, both in India and abroad.
Kicking in from April 1, 2026, these guidelines aim to simplify old rules and keep risks in check.
Banks will be able to lend up to 10% of their Tier 1 capital for strategic buyouts, but only if the loan is fully backed by shares of the company being acquired.
Banks can invest up to 40% of their Tier 1 capital
To get a bank loan under these rules, companies have to put up at least 30% of the money themselves through equity.
There are also caps on how much banks can invest overall—no more than 40% of their Tier 1 capital in total market exposure, with direct exposure capped at 20%.
Individual loans can go up to ₹1 crore but come with strict collateral requirements.
Loans against a bank's own shares or partly-paid/locked-in securities are off-limits—basically, it's all about keeping things safer for everyone involved.