RBI's new rule on loans to prop trading firms explained

Business Feb 23, 2026

Starting April 2026, the Reserve Bank of India will ban banks from giving loans to proprietary trading firms—companies that trade with their own money.
The move targets risky levels of borrowing in India's booming derivatives market, which makes up a huge chunk of all trades on the National Stock Exchange.

What does this mean for brokers and clients?

For brokers and clients, this means stricter rules: they'll need to keep more cash on hand and accept bigger cuts on collateral.
Borrowing for quick trades is about to get pricier, likely slowing down trading activity.
The RBI hopes these changes will make the market safer by reducing big risks—but it could also mean fewer prop trading firms and a major shift in how India's biggest options market works.