India'scentral bank will not soften its new lending rules for retail brokers and proptraders, Reserve Bank of India (RBI) Governor Sanjay Malhotra confirmed today(Monday), dismissing industry calls to revisit the restrictions before theykick in on April 1."Thereis no change that we are contemplating," Malhotra said at a pressconference following the RBI's board meeting.The rules,issued earlier this month after a public consultation process that began inOctober 2025, require banks to back all credit to capital market intermediarieswith 100% eligible collateral, a significant tightening from a system wherepartial or promoter-backed guarantees were common. Banks arealso now barred entirely from financing brokers' proprietary trading, closing astructure that had effectively let prop desks borrow at twice the value oftheir deposits through leveraged bank guarantees.India'sretail traders have lost an estimated $34 billion over four years, with 91% ofindividual futures and options traders recording losses in the fiscal yearending March 2025 - data that has placed India's regulatory toolkit under theglobal spotlight. A detailedbreakdown of how those losses may be shaping enforcement approaches inAustralia, Europe, and beyond is available through the new FMIntelDatalab, whereregistration is free.Brokerage Stocks AlreadyFelt the BlowTheannouncement hit Indian brokerage stocks hard when the rules first landed. BSE,the country's major exchange operator, fell as much as 9.9%, while Angel Oneand Groww dropped 9.5% and 4.8%, respectively. Motilal Oswal Financial Servicesshed 3.3%.Jefferiesestimated that proprietary trading accounts for roughly half of all equityoptions premium turnover - meaning the ban on bank financing for such activitycould squeeze a substantial chunk of market liquidity. The bankpegged BSE as the most exposed, forecasting a potential 10% hit to theexchange's earnings. Angel One, according to JM Financial analysts, would needto "immediately relook" its funding for its margin trading facility,while Groww may need to tap external markets for fresh capital.Brokeragefirms pushed back by writing to the market regulator to seek a review.Malhotra's statement Monday offers little encouragement for that effort.India's Derivatives MarketFaces Mounting PressureThe RBI'smove is the latest in a series of measures aimed at cooling India's derivativesmarket, where retail investor losses have drawn growing scrutiny fromregulators. Combined with a recently hiked transaction tax on equity futuresand options, analysts expect the cumulative effect to dampen trading volumesfurther.When Indiaraised its securities transaction tax earlier this year, it prompted questionsabout whether traders might migrate to unregulated CFD platforms to sidestepthe levies, a concern FinanceMagnates.comcovered indepth following the STT hike announcement.The broaderregulatory tightening has already reshuffled the foreign brokerlandscape. FBS suspendedall marketing activities globally months after exiting the Indian market entirely. Exness haltednew client onboarding fromIndia despite the country representing nearly 30% of its global traffic.Meanwhile, Indian authorities raided officesof Zara FX and froze bank accounts as part of an expanded enforcement push against unauthorized forexand derivatives operations.Inflation Mandate HeadsInto a Scheduled ReviewMalhotraalso addressed India's inflation-targeting framework on Monday, confirming theRBI has sent its recommendations to the government ahead of a formal review dueby the end of March. He declined to reveal the contents of thoserecommendations.Indiacurrently requires the central bank to hold retail inflation at 4%, within atolerance band of 2% to 6%. The country recently updated its inflationmeasurement methodology, reducing the weight assigned to food prices in theconsumer basket. Malhotra said those technical changes would not, on their own,shift the RBI's thinking on what the appropriate inflation target should be.This article was written by Damian Chmiel at www.financemagnates.com.