Mumbai, March 30 The Reserve Bank of India on Monday deferred the implementation of acquisition finance guidelines by another three months to July 1 this year, following feedback from stakeholders.
The central bank stated that it has also revised the "Amendment Directions on Capital Market Exposures," which were first announced on February 13.
The RBI had come out with the guidelines after a consultative process, allowing domestic lenders to fund acquisitions.
"Based on further discussions with stakeholders and a review, it has been decided to extend the effective date of the said Amendment Directions by three months to July 1, 2026," the central bank said on its website.
The changes announced on Monday include the definition of acquisition finance, which has been modified to include mergers and amalgamations, limiting lending to acquire a non-financial entity alone and allowing the acquiring company to avail acquisition finance for on-lending to a subsidiary incorporated in India or overseas for the acquisition of a target company.
Refinancing of acquisition finance can only take place when the acquisition finance has been concluded in all aspects and when the acquiring company has established control over the target company, the RBI clarified, adding that such refinancing should only be used to retire the acquisition finance debt.
It also said that a corporate guarantee from the acquiring company would be required in cases of acquisition finance extended to a subsidiary or a special purpose vehicle of the acquiring company.
Other objectives for issuing the guidelines had included rationalizing the limits for lending by banks to individuals against shares, units of REITs, InvITs, etc., and putting in place a more principle-based framework for lending to capital market intermediaries (CMIs), it said.