What changed
RBI issued an amendment to the Credit Facilities Directions, 2025, dated February 13, 2026. Key changes include inserting definitions for Acquisition Finance, Bridge Finance, Capital Market Intermediaries, Control, Eligible Securities, LTV, Margin, Non-financial company, and Primary Security. The definition of Collateral Security was substituted, and sub-paragraph (i) was renumbered as (ib).
What it means for you
Banks now have clearer regulatory guidance for financing acquisitions and bridge loans, with defined timelines and conditions. The expanded list of Eligible Securities allows banks to accept a broader range of collateral, including REITs and InvITs, potentially increasing lending flexibility. However, the new LTV and Margin definitions require banks to monitor loan-to-value ratios and borrower contributions more rigorously.
What you must do
- Update internal policy documents and credit manuals to incorporate the new definitions for Acquisition Finance, Bridge Finance, and Eligible Securities.
- Train credit and risk teams on the revised collateral and margin requirements, including LTV monitoring.
- Review existing loan portfolios to identify any exposures that may need reclassification under the new definitions.
- Ensure compliance with the one-year cap for Bridge Finance and the control criteria for Acquisition Finance.
Who it affects
Commercial banks extending credit facilities, Credit risk and policy teams, Borrowers seeking acquisition or bridge financing, Capital market intermediaries
What is the maximum tenure for Bridge Finance under the new directions?
Bridge Finance is defined as financing for an interim period not exceeding one year, where the borrower has a firm plan to repay through equity, debt, or asset divestiture.
Which securities are now included as Eligible Securities?
Eligible Securities now include listed Group-1 equity and preference shares, government securities, listed debt securities rated BBB or higher, mutual fund units with repurchase facility, ETFs (excluding commodity ETFs), and units of REITs and InvITs.
Does the amendment affect existing credit facilities?
The amendment modifies definitions and may require banks to review existing portfolios for alignment with new definitions, especially for acquisition and bridge loans, though no explicit reclassification requirement is stated.