RBI Unleashes Banks for Corporate Buyouts, Reshaping India's M&A Landscape

• RBI formally allows banks to undertake acquisition financing, effective FY27, a structural shift for India's dealmaking.
• Banks can finance up to 75% of acquisition value; acquiring entity must contribute 25% equity.
• Eligibility criteria include minimum net worth of ₹500 crore, profit history for listed firms, and BBB-minus rating for unlisted.
• Acquisition finance capped at 20% within overall capital market exposure limits; consolidated debt-to-equity ratio cannot exceed 3:1.
• New rules also revise lending against securities, with differentiated LTV caps for shares, MFs, ETFs, and REITs.