India's RBI defers capital market exposure amendments to July 1
Change
India's RBI postponed the April 1, 2026 effective date for its Amendment Directions on capital market exposures by three months, making the directions effective on July 1, 2026.
Why it matters
Banks must adopt new operational and documentation requirements set out in the amended directions, including tightened rules on acquisition finance, limits on refinance, and a corporate guarantee requirement for subsidiary or special purpose vehicle (SPV) — an entity created to isolate assets and liabilities for a specific transaction — financing. Lenders also need to incorporate retail exposure caps (a ₹1 crore ceiling on loans against eligible securities and a ₹25 lakh ceiling for bank financing of subscriptions to initial public offerings, follow-on public offerings, and employee stock option plans) into credit and risk models before the directions become binding.
Implications
- • Banks' credit and risk teams must update underwriting criteria and risk models to reflect the clarified acquisition-finance definitions and the ₹1 crore/₹25 lakh retail caps before July 1, 2026, or face regulatory non-compliance when the directions take effect.
- • Banks' compliance and legal teams must revise loan documentation and corporate guarantee covenants to incorporate the new requirements for acquisition finance extended to subsidiaries or special purpose vehicles (SPVs) before July 1, 2026, or risk contract disputes and regulatory findings.
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