Capital market stocks BSE, Angel One, Nuvama Wealth Management among others fell up to 10 per cent on February 16 as the Reserve Bank of India (RBI) issued stricter lending norms capital market intermediaries.
Leading the decline, stock exchange BSE crashed as much 9.88 per cent to hit an intraday low of Rs 2,726.30 per share. Following it, brokerage firm Angel One tumbled up to 9.54 per cent to the day’s low at Rs 2,441 apiece. Other brokerage and wealth management firms Nuvama, UTI Asset Management Company, and Motilal Oswal Financial Services fell in the range 1-5 per cent.
What Lending Norms RBI Revised
On February 13, under the Reserve Bank of India (Commercial Banks - Credit Facilities) Amendment Directions, 2026, the central bank issued revised lending norms for capital market intermediaries, including brokers and clearing members, mandating that all bank credit to such entities be fully secured by collateral.
"In general, all credit facilities to CMIs shall be provided on a fully secured basis (i.e. 100 per cent collateral)," the circular states.
The revised norms also prohibit lenders from financing proprietary trading or investments made on their own books.
The RBI circular said, "Banks shall not provide finance to a CMI for acquisition of securities on its own account, including for proprietary trading or investments."
The central bank also said that banks can extend funding to capital market intermediaries only for operational needs, including working capital, settlement-related mismatches, margin trading facilities and permitted market-making activities.
The RBI further mandated stricter risk controls such as minimum collateral thresholds for guarantees, defined haircuts on securities offered as security and inclusion of such exposures within banks’ overall capital market exposure limits.
For bank guarantees issued in favour of stock exchanges or clearing corporations, the RBI prescribed tighter safeguards. "Such guarantees shall be secured by a minimum collateral of 50 per cent, out of which 25 per cent shall be in cash," the central bank said.
If equity shares are offered as collateral, banks must apply a minimum 40 per cent haircut while valuing them.
The revised norms will come into effect from April 1, 2026.
Why The Revised Norms Triggered Fall In Capital Market Stocks
The revision comes after the government’s decision to raise the transaction tax on single-stock and index derivatives in India, a measure aimed at discouraging excessive speculative activity in the futures and options (F&O) segment. By making trades costlier, the tax seeks to discourage short-term, high-frequency bets. Market participants now worry that, alongside the central bank’s tighter lending rules, these steps could reduce liquidity and dampen overall trading volumes in the near term.
