RBI issued these new directions on February 13, 2026. | Photo credit: ANUSHREE FADNAVIS
The report says the new framework will enable banks to finance acquisition deals while keeping risks under control. It added that by placing limits on the post-acquisition debt-to-equity (D/E) ratio and limiting exposure to the capital market (CME), only financially stable companies will have access to bank financing.
This will help reduce systemic risk, meaning the likelihood of financial instability in the banking system will be reduced.
It stated: “We believe the new rules will enable banks to actively participate in corporate takeovers, mergers and acquisitions, leveraged takeovers, etc. Meanwhile, improved lending limits against retail securities should provide deeper liquidity.”
According to the report, these rules will help companies get money for acquisitions and also increase the flow of money into the market.
RBI issued these new guidelines on February 13, 2026. These rules will come into effect from April 1, 2026, or sooner if banks adopt them sooner.
One of the most important changes is that banks can now finance up to 75 percent of the costs if a company wants to buy another company. This is called acquisition financing. However, only strong and financially stable companies are eligible.
These companies must have a net worth of more than ₹500 crore, have made a profit in the last three financial years or have good creditworthiness.
After the acquisition, the company’s total debt may not exceed three times its equity. This rule is intended to ensure that companies do not take out too many loans and reduce financial risk.
The RBI has also allowed banks to extend more loans to individuals against their investments such as stocks, mutual funds, ETFs, REITs and InvITs. These investments serve as security for the loan. The maximum borrowing limit for individuals has been set at ₹1 crore. Of this, up to ₹25 lakh can be used to buy shares in the stock market.
Banks can also provide loans of up to ₹25 lakh to individuals to invest in IPOs, FPOs and ESOPs. An initial public offering is when a company sells its shares to the public for the first time.
According to the report, these changes will help increase liquidity in the market. Liquidity means the availability of money in the market, making it easier for investors to buy and sell stocks.
At the same time, RBI has set limits on managing risks. Banks’ total exposure to the capital markets should not exceed 40 percent of their capital base. Within this, only 20 percent can be used for acquisition financing.
The report also noted that stricter rules on brokers, such as requiring full collateral and lowering the value of shares used as collateral, could make it more difficult and expensive for them to obtain bank financing.
Separately, RBI has proposed draft rules to allow banks to finance Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs), which invest in real estate and infrastructure projects. Only listed trusts with at least three years of operation and stable cash flows are eligible.
RBI has sought feedback on these draft rules till March 6, 2026, and the final rules will come into effect from July 1, 2026.
The report says that overall, the new RBI rules will help improve corporate financing and increase stock market activity, while keeping financial risks under control.
Published on February 16, 2026
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