The Reserve Bank of India has notified Amendment Directions under the Reserve Bank of India (Commercial Banks — Credit Facilities) Directions, 2026 (Revised), dated 30 March 2026 and taking effect from 1 July 2026, introducing for the first time a structured regulatory framework specifically governing how Indian commercial banks may extend credit facilities to finance corporate acquisitions — a space that, until now, banks navigated largely through case-by-case internal risk frameworks rather than a dedicated regulatory template.
Acquisition finance has historically sat in something of a regulatory grey zone in India, with banks more cautious than their NBFC and international counterparts about direct lending against acquisition structures, partly owing to the absence of settled RBI guidance on permissible structures, leverage limits, and security arrangements specific to M&A-driven lending. The new Directions are expected to give banks clearer parameters — and correspondingly, more confidence — to compete more directly in a financing market that has often gone to NBFCs, offshore lenders, or private credit funds instead.
The gap the new framework fills has been felt acutely in large domestic M&A transactions over the past several years, where acquirers seeking leveraged buyout-style financing structures have often had to look to offshore lenders, structured credit funds, or NBFCs precisely because domestic commercial banks lacked a clear regulatory template for this kind of lending and were correspondingly conservative in structuring and pricing such facilities. A dedicated RBI framework changes that calculus meaningfully — it gives bank credit committees and risk teams a defined regulatory reference point to work from, which historically has been one of the biggest practical obstacles to banks competing more aggressively in acquisition finance, independent of whether they had the balance sheet capacity to do so.
For corporates and private equity sponsors structuring acquisitions, the new framework is likely to widen the pool of viable domestic acquisition-finance lenders and may bring more competitive pricing into a segment that has been relatively underserved by regulated commercial banks. Deal teams should factor the 1 July 2026 effective date into financing timelines for transactions currently being structured, since facility documentation entered into before and after that date may need to be assessed against different regulatory baselines — and sponsors currently reliant on offshore or NBFC acquisition financing should evaluate whether refinancing through a domestic bank facility under the new framework could offer more favourable terms once lenders have had time to build out their internal acquisition-finance capabilities under the new Directions.