BSE shares fall up to 5%, Angel One down 4% as RBI likely to go ahead to implement bank lending rule for... - Moneycontrol.com

Published 5 June 2026 · finance

RBI Governor Sanjay Malhotra said the central bank intends to go ahead with implementing rules on bank lending for proprietary trading BSE shares fall 5%

RBI Governor Sanjay Malhotra said the central bank intends to go ahead with implementing rules on bank lending for proprietary trading BSE shares fall 5%, Angel One down 2% as RBI likely to go ahead to implement bank lending rule for prop trading Capital market shares fell up to 5% after RBI's new lending rules RBI rules may raise costs for proprietary trading firms Brokers must fully collateralise proprietary trading loans Did our AI summary help? Capital market shares fell up to 5% on June 5 as RBI Governor Sanjay Malhotra said the central bank intends to go ahead with implementing rules on bank lending for proprietary trading. Stock exchange BSE shares fell up to 5% on June 5 while those of Angel One declined up to 4% after the Governor's statement.

Nifty Capital Markets index closed trading 1.4% lower on June 5 with BSE, MCX leading the losses with 3.7% and 3.5% decline, respectively. In March, RBI had deferred the implementation of new capital market rules to July 1, 2026, giving brokers a breather. Until then, brokers can continue using bank guarantees backed by 50% margin. The MTF traders could look at potentially higher costs from July 1 because increased broker overheads from capital requirements may lead to higher brokerage fees or increased margin requirements for the end-trader. RBI had delayed the roll-out of stricter rules on loans to proprietary traders and some liquidity providers, offering relief as markets are roiled by volatility due to the Iran conflict.

The new rules may raise the cost of raising capital for proprietary trading firms and squeeze profits. While Indian banks traditionally do not directly finance proprietary trading, the directive closes a loophole that allowed short-term working capital loans given by banks to be diverted for trading by brokers. The policy follows a series of steps by authorities to curb speculation, including a sharp increase in transaction taxes on single-stock and index derivatives. They add to curbs introduced in late 2024 to cool a boom that had turned India into a global options hub. Regulators see the measures as a necessary trade-off to prevent market losses from spilling into household finances through leverage and unsecured loans.

Under the amended RBI (Commercial Banks – Credit Facilities) Directions, brokers will be required to provide full collateral against loans for proprietary trading. The framework also bars bank funding for acquisition of securities on a broker’s own account, except for limited market-making activities, and mandates that most exposures be backed by 100% collateral, including a significant cash component. Circular states, “Banks shall not provide finance to a CMI for acquisition of securities on its own account, including for proprietary trading or investments”.