Current Affairs · Banking Regulations and RBI Frameworks
Regarding the Reserve Bank of India's (RBI) prudential framework for acquisition financing, which of the following best describes the key norm for bank lending?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Acquisition financing has been extended to all unlisted firms regardless of net worth, provided they demonstrate a five-year track record of profitability.
- 2Banks are permitted to fund creeping acquisitions, stake increases, and joint-venture partner buyouts, with mandatory equity contribution reduced to 25% and allowed via internal accruals.✓
- 3The mandatory equity contribution for corporate acquisitions has been increased from 25% to 30%, which must consist of fresh capital infusion.
- 4Banks are strictly limited to financing only initial control acquisitions to prevent excessive corporate debt accumulation.
Correct answer
Banks are permitted to fund creeping acquisitions, stake increases, and joint-venture partner buyouts, with mandatory equity contribution reduced to 25% and allowed via internal accruals.
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