RBI's tighter capital market norms kick in from today; Ashvin Parekh on why the timing matters

New RBI capital market norms for banks have come into effect, placing explicit limits on bank lending against security-market exposure and banning third-party collateral in proprietary trading arrangements. The rules, originally proposed in February and postponed from an April 1 rollout after banks sought more time, cap how much banks can lend against or accept as collateral tied to securities and real estate. According to expert Ashvin Parekh, the July timing better suits regulators by avoiding a seasonally optimistic period when leverage-driven market activity typically rises.