🚨 Reserve Bank of India Tightens Capital Market Funding Norms – Cash Is King from April 2026

The RBI has tightened norms for banks' capital market exposures to brokers, effective April 1, 2026, promoting a cash-first approach to curb volatility risks. Key Changes Ends partial reliance on promoter/corporate guarantees; requires 100% secured funding via collateral. Bank guarantees (BGs) to exchanges need 50% collateral, including 25% pure cash (e.g., Rs 25 cash for Rs 100 BG). 40% minimum haircut on equity shares as collateral; Rs 100 shares count as Rs 60 only. Prohibits bank funding for brokers' proprietary trading, except market-making or debt warehousing. All broker lending counts as capital market exposure (CME), capped at ~40% of bank's Tier 1 capital. Mandates continuous collateral monitoring with margin calls during value drops. Impacts Higher capital lock-in and costs for brokers; smaller firms may cut leverage by 20-30%. Reduced bank lending appetite, potential BG price hikes. Stocks like

could see pressure as tighter funding squeezes prop desks. 📌 Disclaimer: This content is for information only and not investment advice. Investments in securities market are subject to market risks. Read all the related documents carefully before investing. Please consult a SEBI-registered advisor before making any investment decisions.