RBI Delays Capital Market Exposure Rules Until July 1

New Delhi, April 1 — The Reserve Bank of India (RBI) has extended the deadline for implementing its revised capital market exposure rules by three months. The rules will now come into effect on July 1, 2026, instead of the previously scheduled date of April 1.

This decision was made after feedback from banks, capital market intermediaries, and industry organizations, which highlighted operational and comprehension challenges in implementing the new rules.

The RBI had released the draft of these rules on February 13, 2026, followed by public consultations.

The RBI has also provided clarity on matters related to acquisition financing, loans against financial assets, and credit exposure to capital market intermediaries.

Under the new rules, the scope of acquisition finance has been expanded to include mergers and amalgamations, addressing previous ambiguities. However, this financing will only be provided in cases where the objective is to gain control over a non-financial company.

If the targeted company is a holding company, banks must ensure that potential benefits (synergies) are reflected across all its subsidiary companies, not just the parent company.

Companies are now permitted to obtain acquisition finance through Indian or foreign subsidiaries.

Meanwhile, refinancing rules have been tightened. Banks will only be able to refinance acquisition loans once the deal is completed and control over the company is established. Additionally, this money can only be used to repay existing acquisition loans.

Furthermore, if acquisition finance is provided to a subsidiary or special purpose vehicle (SPV), a corporate guarantee from the acquiring company will be required, enhancing the banks' security.

This decision gives banks additional time to align their systems and processes with the new rules. Moreover, the clarity brought by the new regulations is expected to reduce legal disputes and risks.

For investing companies, this framework opens new avenues for acquisition finance while also setting limits through control-based investments and strict refinancing rules.

The RBI has also provided some relief for capital market intermediaries, allowing banks to fund proprietary trading against 100 percent cash or cash-like collateral. Additionally, restrictions on financing against securities used for market-making activities have been lifted.