Archive · 5 Oct 2026
Indian Brokers’ $33 Billion Debt Surge Tracks Leveraged Stock Trading
More people in India are borrowing money from brokers to buy stocks.
This is called trading with leverage.
Brokers are borrowing money themselves to provide those loans.
They have raised about 3.2 trillion rupees through short-term debt this year, according to the reported data.
Brokers’ share of commercial paper issuance has risen from 4% in 2021 to about 21%.
The amount of stock bought using borrowed money was close to a record at the end of September.
New limits on some bank lending have encouraged brokers to look for other ways to raise money.
Commercial paper is expected to remain popular because it is relatively inexpensive and short-term.
A sharp fall in share prices could create risks for businesses built around these loans.
Prominent Indian brokers raised about 3.2 trillion rupees ($33 billion) through commercial paper so far this year.
Brokers’ share of commercial paper issuance rose to about 21%, from 4% in 2021.
Leveraged equity positions approached 1.6 trillion rupees as of September 30.
The Reserve Bank of India curbed bank lending to proprietary trading firms in February, while a June proposal would let brokers use bonds to fund such trades.
Commercial paper is expected to remain a key funding source because it is relatively low-cost and short-term.
- Who
- Indian stock brokers, including HDFC Securities, ICICI Securities and Kotak Securities, are borrowing to fund leveraged equity trading.
- What
- Broker commercial paper issuance has risen as margin trading expands.
- When
- The issuance figures cover this year; regulatory changes came in February and June, and leveraged positions were measured as of September 30.
- Where
- India.
- Why
- Brokerages need funding for growing margin-loan businesses, while regulatory restrictions have narrowed access to bank lending.
Risks of Leveraged Trading
Demand for Margin Loans
Rapid growth and market risk
Risks of Leveraged Trading
Zerodha founder Nithin Kamath warned that a sharp market decline could pose risks to the firm’s fast-growing margin-loan business.
Demand for Margin Loans
Nayan M. Vala Securities chief executive Dharmesh Vala said the industry’s funding book has more than tripled in three years and appetite for leveraged trading remains strong.
Broker funding choices
Risks of Leveraged Trading
The Reserve Bank of India’s restrictions on bank lending to proprietary trading firms have pushed brokerages to seek alternative funding.
Demand for Margin Loans
Commercial paper remains attractive because it costs less than the interest brokerages charge on margin loans and has a short tenor suited to those loans.
- Broker commercial paper issuance
- About 3.2 trillion rupees ($33 billion) so far this year, based on issuance by prominent brokers.
- Share of commercial paper issuance
- Brokers accounted for about 21% so far this year, up from 4% in 2021.
- Leveraged equity positions
- Nearly 1.6 trillion rupees as of September 30, approaching a record.
- Non-bank financier note yield
- Three-month notes yielded 7.18% last week.
- Broker margin-loan rates
- About 9% to 20%, depending on terms.
- Indian stock market value
- $4.8 trillion; margin-loan positions account for less than 0.5%.
- Regulatory changes
- The Reserve Bank of India curbed bank lending to proprietary trading firms in February; the markets regulator proposed broker bond financing in June.