India’s central bank tightened rules for loans taken by firms that undertake proprietary trading in shares and commodities and offer leverage to clients, the latest measure aimed at reducing speculative market activity in the South Asian nation.
All credit facilities to securities firms will have to be backed by collateral, while lending for trading on their own account or investments by brokers will be prohibited, according to a statement published on the Reserve Bank of India’s website late Friday. The so-called prudential rules for capital market intermediaries such as stock and commodity brokers will come into effect from April 1, the central bank said.
