A company can agree to buy a rival before it has assembled the money to pay for it. The acquisition price, the financing plan and the completion date answer different questions.
India’s acquisition-finance framework makes that distinction important. The useful question is not simply whether a bank can lend. It is how much of the transaction the buyer must support, and what remains uncertain after an agreement is signed.
The Breakdown
The RBI’s revised directions of March 30, 2026 superseded its February 13 amendments. They took effect on July 1, with earlier adoption permitted only in entirety. They cover eligible Indian non-financial companies acquiring strategic control of domestic or overseas non-financial businesses.
At sanction, acquirers need at least ₹500 crore in net worth and profit after tax in each of the previous three financial years, assessed standalone and consolidated. Unlisted acquirers also need an investment-grade rating before disbursement.
Total bank financing cannot exceed 75% of independently assessed acquisition value, not automatically the negotiated price. The buyer must supply the balance from its own funds. Listed buyers can conditionally bridge that contribution, repaying within 12 months only from internal accruals, equity issuance or asset sales. Bridge finance cannot dilute acquisition-loan security; a bank-provided bridge must be secured. Consolidated debt-to-equity must continuously remain within 3:1 after acquisition.
Why This Matters
The price a seller accepts need not be the value a lender supports. Ownership negotiations and repayment-risk assessments answer different questions.
Consider a hypothetical manufacturer buying a smaller rival. A familiar customer base may make the business attractive. Integrating its factory, retaining staff and collecting outstanding invoices are different tasks. Paying the seller does not complete those jobs or establish that the combined operation will generate enough cash.
A signed deal is a separate milestone
FMC announced on May 7 that it had agreed to sell FMC India to Crystal Crop Protection for $252 million, subject to adjustments. It expected completion by year-end, subject to conditions. The Competition Commission recorded approval of the acquisition on September 29.
Those documents establish an agreement and a competition approval. They do not establish a bank loan, disbursement or completed acquisition. The transaction illustrates the importance of separating stages, not evidence that this particular purchase has been funded under the RBI framework.
The Big Picture
An acquisition announcement is a starting point for assessing a business, not a complete financing statement. Ownership terms describe what is being bought. Financing terms describe who supplies the money and who bears repayment risk. Later operating results show whether the combination works.
The Crunch
Do not collapse agreement, approval, financing and completion into one event. A takeover can make strategic sense while still having substantial financial and operational work ahead.