By Bl Mumbai Bureau

Copyright thehindubusinessline

The RBI move to enhance banks’ lending to stock market investors will deepen market and allow retail investors make larger bets while investing in both primary and secondary markets.

The banking regulator RBI has proposed to remove the regulatory ceiling on lending against listed debt securities and enhanced limits for lending by banks against shares from ₹20 lakh to ₹1 crore and for IPO financing from ₹10 lakh to ₹25 lakh per person.

RBI has also proposed to withdraw the framework introduced in 2016 that disincentivised lending by banks to specified borrowers (with credit limit from banking system of ₹10,000 crore and above).

Anil Gupta, Senior Vice President and Co-Group Head, ICRA, said the relaxation of lending norms including the removal of regulatory caps on loan against listed debt securities and enhanced limits for lending against shares and IPO financing will further empower banks in supporting market growth though the higher financing limits enjoyed by NBFCs will continue to provide the latter with a competitive edge.

RBI has also expanded banks’ lending scope by allowing it to finance corporate acquisitions which will deepen their role in capital market activities, he added.

Justifying the RBI move, Sanjay Malhotra, Governor, RBI, said while the Large Exposure Framework since put in place for banks addresses credit concentration risk to a particular entity or group at an individual bank-level, concentration risk at the banking system level will be managed through specific macro-prudential tools as and when considered necessary.

In a bid to reduce the cost of infrastructure financing by NBFCs, RBI has proposed to reduce the risk weights applicable to lending by NBFCs to operational, high quality infrastructure projects.

Mahendra Kumar Jajoo, CIO (Fixed Income), Mirae Asset Investment Managers (India), said the policy review has many significant measures beyond rate adjustments such as review of ECL (expected credit loss) framework, capital market exposure limits for banks and large borrower exposure norms, which will potentially have significant impact on ease of doing business in financial services sector and deepen lending and capital market businesses.

“In terms of the immediate impact, money market rates are expected to ease further while the long term rates are likely to remain range-bound,” he said.

Ajay Garg, CEO, SMC Global Securities, said the RBI reforms can provide a major boost to the stock broking industry, improving liquidity, broadening investor participation and enabling high-net-worth individuals to access larger allocations in IPOs.

Indian banks now have a stronger framework to finance corporate acquisitions efficiently. Enhanced credit access and higher lending limits are expected to drive mergers, acquisitions, and investments, he added.

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Published on October 2, 2025