Acquisition funding rules relaxed further

Exposure limit raised to 20% from 10%

- FE BUREAU

THE RESERVE BANK of India (RBI) has eased its proposed norms on acquisition financing, allowing banks to extend aggregate exposure of up to 20% of their tier 1 capital towards such funding, up from the earlier proposed cap of 10%.

The relaxation follows requests from several lenders who said the previous limit curtailed their ability to participate in acquisition deals.

The RBI released the final capital exposure market guidelines on Friday. The draft version had been issued on October 24.