Angel One, Groww shares in focus after RBI tightens capital market exposure norms

Shares of Billionbrains Garage Ventures Ltd. (Groww), Angel One Ltd. and other capital market names will be in focus on Monday, February 16, after the Reserve Bank of India (RBI) issued amendment directions on banks' capital market exposure norms.

The revised directions will come into effect from April 1, 2026.

On Friday, the RBI issued the Commercial Banks - Credit Facilities Amendment Directions, 2026, updating norms for how banks extend credit to stockbrokers and other capital market intermediaries. The move follows a draft consultation paper released in October 2025.

Under the revised framework, banks can extend credit to SEBI-regulated brokers and intermediaries only on a fully secured basis. Partial unsecured guarantees or promoter-only guarantees will no longer suffice.

Bank guarantees issued in favour of exchanges or clearing houses must be backed by at least 50% collateral, of which 25% must be in cash. Equity shares accepted as collateral will attract a minimum 40% haircut for valuation purposes.

The RBI has also clarified that banks cannot fund proprietary trading by brokers. However, financing may continue for market-making activities and short-term warehousing of debt securities.

Margin trading facilities offered by brokers to clients can continue to receive secured funding, but banks must incorporate margin call provisions and monitor collateral on an ongoing basis.

All such lending will count towards banks' capital market exposure limits, which are subject to prudential caps. This could influence the overall quantum of funding available to the sector.

What brokerages are saying

Citi said the norms could lead to moderation in overall trading activity in select cohorts, though it is premature to assess the full profit and loss impact.

It expects brokers, clearing members and exchanges to be affected.

JM Financial said the move may reduce access to bank funding and result in higher trading costs for brokers.

Among listed players, it expects Angel One to reassess funding for its margin trading facility book. Groww, whose MTF book is scaling up aggressively, may need to tap capital markets as it expands.

Industry view

Speaking to CNBC-TV18, Dhiraj Relli, MD and CEO of HDFC Securities, said the circular is relatively stringent for proprietary brokers.

He explained that brokers typically approach banks for funding through bank guarantees to meet margin requirements. Under the new framework, proprietary trading will require 100% collateral, with 50% in cash and cash equivalents.

The circular now clearly defines eligible collateral. Relli said that most banks are comfortable with capital market exposure, so the broader funding environment may not face significant stress.

However, intraday limits could see some pressure as the cost of such limits is likely to rise. There is no impact on bank guarantees issued for client trades.

Proprietary trading accounts for around 40% of overall F&O volumes. Brokers that rely on bank guarantees for prop trades will now need to provide full collateral, half of it in cash.

Large brokers have relatively limited exposure to proprietary trading, and for HDFC Securities the impact is negligible. Relli estimated a potential 15-20% impact on F&O volumes industry-wide due to higher borrowing costs.

He added that the recent increase in STT, regulatory measures by SEBI and now the RBI circular could collectively weigh on exchange volumes.

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