Why in the news
New RBI norms on bank lending to brokers, clearing members, custodians and market makers start from 1 July 2026, after being pushed back from 1 April. Brokers have lobbied the Finance Minister for relief.
Key facts
- Instrument: RBI (Commercial Banks – Credit Facilities) Amendment Directions, 2026 (Revised), dated 30 March 2026, replacing the 13 February 2026 original.
- Adds Chapter XIII A, “Credit Facilities to Capital Market Intermediaries (CMIs)”.
- Three aims: allow bank finance for corporate acquisitions (including mergers), rationalise lending to individuals against shares and REIT/InvIT units, and set principle-based lending rules for CMIs.
- CMIs: regulated entities in broking, clearing, custody, market-making and related services; Standalone Primary Dealers and QCCPs are excluded.
Rules for CMIs
| Element | Norm |
|---|
| Eligibility | SEBI-registered, regulated and prudentially compliant CMIs |
| Classification | Every CMI exposure is Capital Market Exposure |
| Security | 100% collateral, even for intraday |
| Not accepted as collateral | CP and NCDs with original maturity up to one year |
| Proprietary trading | Banks cannot finance it |
| Market-makers | Funded only against 100% cash or equivalents |
| Intraday lines | Allowed at minimum 50% collateral for centrally cleared client trades |
| Limits | Counterparty and aggregate limits under Large Exposure Framework |
Bank guarantees and other loans
| Item | Requirement |
|---|
| Client guarantees | At least 50% collateral, of which 25% in cash |
| Proprietary guarantees | Fully secured, at least 50% in cash |
| Loan against listed shares | LTV cap 60%; minimum haircut 40% |
| IPO loans | Up to ₹25 lakh per person; 25% margin |
| Acquisition finance | Only to gain control of a non-financial target; up to 75% of deal value; refinance after control is established; SPV deals need corporate guarantee |
- Loan-against-securities caps apply across the whole banking system, not per bank.
Industry concerns
- A four-member broker group met the Finance Minister and DEA Secretary on 24 June 2026.
- Asks: carve-out for liquidity providers in designated liquid derivatives, with bank provisions tied to SPAN use below 50% of margin; wider market-making definition; tax relief on Electronic Gold Receipts.
- Warning: wider bid-ask spreads and higher impact costs. Bank guarantees are about ₹1.2 trillion of an ₹11-12 trillion clearing-corporation collateral pool; intraday funding adds ₹80,000 crore. CareEdge flagged risk to volumes.
Key terms
- SPAN: portfolio margining method devised by the Chicago Mercantile Exchange in 1988, computing worst probable loss across scenarios.
- Large Exposure Framework: caps exposure to one counterparty at 20% of Tier 1 capital (25% exceptionally) and to a group at 25%.
- Capital Market Exposure: aggregate limit of 40% of a bank’s net worth.
- EGR: digital receipt for vaulted gold, approved by SEBI in September 2021.
Exam angle
- Effective date 1 July 2026; new Chapter XIII A.
- Key figures: 100% collateral, 60% LTV, 40% haircut, 75% acquisition cap.
- CMEs capped at 40% of net worth.