Highlights

•  BSE shares fell 7.45% on 16 February 2026 amid RBI’s revised lending rules
• Angel One declined 5.13% following the new broker credit framework.
• RBI mandates full collateral backing for all broker loans, prohibiting unsecured lending.
• Equity securities face a minimum 40% haircut under the new framework.
• Margin trading funding must be backed by high-quality collateral, with at least 50% in cash or cash equivalents.
• Banks are barred from funding proprietary trading, except for market-making activities.

BSE Ltd (NSE:BSE) and Angel One Ltd (NSE:ANGELONE) shares declined sharply on 16 February 2026 after the Reserve Bank of India issued new lending guidelines for capital market intermediaries, effective 1 April 2026. BSE closed at ₹ 2,800, down 7.45%, while Angel One fell to ₹ 2,560, a 5.13% decline.

The pullback reflects market anticipation of reduced leverage and tighter liquidity for brokers. Both stocks remain higher over the past year, with BSE up 61.27% and Angel One up 15.75%, highlighting that today’s movement is event-driven rather than due to fundamental weaknesses.

Key Provisions of RBI’s Updated Lending Framework

The RBI’s Commercial Banks (Credit Facilities) Amendment Directions, 2026 set stricter rules for banks’ lending to brokers and other capital market intermediaries. Banks must now provide credit only on a fully secured basis, this means that for any credit extended, brokers must pledge assets—such as cash, government securities, or approved high-quality instruments—that fully cover the loan amount.

Unsecured lending is no longer permitted, ensuring that all bank exposure to brokers is fully secured and reducing potential credit risk. For equity shares accepted as collateral, a minimum 40% haircut applies, reducing the effective lending value.

Banks are also barred from funding proprietary trading by brokers, with the exception of market-making, and cannot count these securities as collateral. For margin trading facilities provided to clients, banks must secure loans with high-quality collateral, of which at least 50% must be cash or cash equivalents, ensuring safer leverage.

Additionally, all exposures must fall within counterparty risk and large exposure limits, aiming to curb concentration risk from lending to individual brokers or small groups. These measures collectively tighten leverage in capital markets and increase operational discipline.

Implications for Capital Market Stocks

BSE, Angel One, and other brokerage-linked stocks derive revenue from trading volumes, margin activity, and client participation. By imposing full collateral requirements, haircuts, and stricter margin funding norms, the RBI framework could constrain leveraged trading and speculative activity.

Lower leverage can translate into more conservative positions, moderated margin trading growth, and potential short-term volatility in cash and derivatives markets. Investors appear to be pricing in a slower expansion of trading volumes under the new regime, which has contributed to the observed declines in share prices.

Outlook

While the immediate impact on earnings is uncertain, the circular signals a structural shift toward lower leverage and enhanced risk monitoring in broker funding. Stocks tied to market volumes may experience near-term volatility as participants adjust to higher funding costs and tighter capital rules.

FAQs

Q1: Why did BSE and Angel One shares fall on 16 February 2026?

 The decline follows RBI’s new lending guidelines for brokers, including full collateral requirements and haircuts on equity securities.

Q2: What are the key RBI provisions affecting brokers?

Banks must provide credit only on a fully secured basis, apply a minimum 40% haircut on equity collateral, limit proprietary trading funding, and enforce stricter margin funding and exposure limits.

Q3: Will the RBI circular affect the companies’ long-term growth?

The circular reduces leverage and may moderate trading volumes, leading to short-term volatility, but long-term fundamentals remain unchanged.