Banks lending to brokers increased the rising market activity

MUMBAI: Institutional credit for stockbrokers and brokerage companies has increased by 28% in 2024-25, which reflects the participation of investors in the high trade activity and equity market.

Jand was 1.52 lakh crore in the financial year 25 lending to stockbrokers, showing annual reports of banks, representing more than 90% of the banking system.

Punjab National Bank showed an increase of 2 37% to ₹ 120 crore in FY 25, while ICICI Bank maintained the largest Nder -leading position providing 39,458 crore, compared to 11% compared to the financial year 24.

The country’s largest Nder state bank, on the contrary, has reduced its exposure to this segment by 18% annually.

Stockbrokers borrow from banks to deposit stock exchanges as capital needed to trade stocks. Brokers usually have a combination of stocks, cash and bank guarantees with stock exchanges that can take positions based on the value of the property deposited in the exchanges.

Brokers fund their customers by providing a portion of the funds needed to buy stocks. Then the remaining brokers are given to fund the transaction, known as margin funds. For example, an investor can buy stocks worth ₹ 1000 with about ₹ 200 or ₹ 300 and funds are funded by the remaining brokers under the method of margin funds. Banks toward margin trading for brokers have dropped 72% in the financial year to 525 crore.

Banks provide loans to stockbrokers and brokerage companies for a short period against very liquid stocks. In most cases the margin is worth 50% higher and the brokers meet the personal needs or extend their business.