The Reserve Bank of India on Friday issued draft norms allowing all banks operating in the country to fund acquisitions by Indian companies and increase the amount of loans they can give to individuals to buy shares through IPOs and FPOs. The RBI has proposed to implement the rationalized norms from April 1, 2026. This move by the RBI will open up avenues for companies to access more funding.
The Reserve Bank of India has sought comments from shareholders by November 21, 2025.
The central bank said the draft “Reserve Bank of India (Commercial Banks – Capital Market Lending) Guidelines, 2025” seeks to rationalize and unify the rules governing such loans. The central bank has invited comments from stakeholders on this by November 21, 2025. This has been a long-pending demand of Indian banks. Recently, State Bank of India Chairman C.S. Setty also strongly advocated for allowing banks to fund mergers and acquisitions, similar to global lenders.
Banks can finance a maximum of 70 percent of the acquisition value
According to the draft, “A bank can finance a maximum of 70 percent of the acquisition value. At least 30 percent of the acquisition value must be funded by the acquiring company as equity using its own funds.” The draft further states that banks can provide loans up to ₹25 lakh per person to individuals for the purchase of shares under an initial public offering (IPO), follow-on public offering (FPO), or employee stock option plan (ESOP), subject to certain conditions. The current limit is just ₹10 lakh.
