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RBI proposes 70% cap on financing...
Financial Express Kochi
|October 25, 2025
FROM THE FRONT PAGE
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ITALSO SAID that the aggregate exposure of a bank towards acquisition financing shall not exceed 10% of Tier-1 capital and proposed that the financing can be extended directly to the acquirer or to a step-down SPV set up for acquisition.
It said that the acquirer should be a listed firm with a record of satisfactory networth and profits for the past three years. Also, the target company and the acquirer should not a related party. Further, the acquisition value of the target company shall be determined by two independent valuers. The post-acquisition debt-to-equity ratio at the acquiring company or the SPV/target company will be subject to 3:1.
As collateral, the bank will have shares of the target company as primary security, and assets of the acquirer and/ortarget company or other securities held by the acquiring company, may be taken as collateral security as per the bank’s policy.
This story is from the October 25, 2025 edition of Financial Express Kochi.
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