Skip to content
Free updates Login
BankingNABARD / RBI

RBI Prop Trading Curbs May Favour Foreign Firms

28 February 20261 min read
BANKING & FINANCERBI Prop TradingCurbs May FavourForeign Firms28 February 2026safalsetu.com

Why in the news

RBI tightened norms for proprietary traders; participants fear an unintended edge for foreign firms.

Key facts

AspectBeforeFrom 1 April
Security for bank guaranteesSmall cash margin, or personal or corporate guaranteesFully secured
  • Non-cash collateral allowed: government bonds, sovereign gold bonds, listed shares, listed convertible debt, mutual fund units.

Concerns

  • Some banks may take SBLCs from global banks for foreign firms, though the RBI list omits them.
  • Domestic traders usually lack such access.

An SBLC is a global bank’s promise to pay if its client defaults.

Exam angle

  • 50% cash; effective 1 April.

Test yourself

1. What minimum share of cash collateral must bank guarantees to proprietary traders carry under the RBI's tighter norms?

Guarantees must be fully secured with at least 50% in cash.

2. Which instrument might let foreign prop firms meet collateral needs but is not expressly in the RBI's eligible list?

SBLCs from global banks are not listed as eligible collateral.

3. Under the new RBI norms, which of these is eligible non-cash collateral for bank guarantees to prop traders?

Sovereign gold bonds are listed; personal and corporate guarantees were the earlier options.

This topic is part of Daily Current Affairs 27 February 2026 (25 topics).

All topics of the dayDay quizFebruary 2026

Read more