The Reserve Bank of India tightens lending regulations to curb speculation

The Reserve Bank of India has implemented stricter regulations on loans for businesses participating in proprietary trading of stocks and commodities. According to information published by Bloomberg on X, this move is part of a broader strategy to control excessive speculation in the financial markets.

The new regulatory framework focuses on limiting the leverage that financial institutions can provide to trading clients. Tightening credit conditions aims to reduce systemic risk and limit market volatility caused by highly leveraged trading.

This policy reflects concerns that large borrowing positions could amplify losses during market downturns, thereby enhancing financial stability, improving risk management, and moving toward a more sustainable trading environment for India’s capital markets.