Archive · 25 Oct 2025
RBI Proposes Rules for Bank Financing of Acquisitions
The RBI wants to allow banks in India to lend money to companies that want to buy other companies.
Banks can lend up to 70% of the cost.
The company buying another company must be listed on the stock market, made money in the last three years, and have a good net worth.
There are also rules about getting valuations of the target company.
The RBI wants banks to be careful and make sure these are good loans.
These changes aim to make it easier for companies to invest in each other.
RBI proposes new rules for banks to finance corporate acquisitions.
Banks can finance up to 70% of the acquisition cost.
Acquiring companies must be listed, profitable for three years, and have a satisfactory net worth.
Acquisition financing can be provided to the acquiring company or a special purpose vehicle.
The RBI is seeking stakeholder feedback on the draft circular.
- Who
- Reserve Bank of India (RBI)
- What
- Proposed new guidelines allowing banks to finance acquisitions
- When
- Not specified; draft circular issued, seeking stakeholder input
- Where
- India
- Why
- To increase acquisition financing and promote strategic investments
- Regulatory Body
- Reserve Bank of India (RBI)
- Subject
- Bank financing for corporate acquisitions
- Maximum Bank Financing
- 70% of acquisition cost
- Acquirer Eligibility
- Listed companies, profitable for 3 years, satisfactory net worth
- Required Valuations
- Two independent valuations
Sources
RBI proposes new infrastructure risk weights for NBFCs
RBI plans to let banks fund corporate acquisitions with tighter safeguards
Mint Explainer | RBI tightens rules on bank M&A loans: What it means for corporate buyouts
Why RBI’s New Rules Could Transform How Indian Companies Buy Rivals
RBI proposes to allow banks to fund acquisitions
