SEBI Clarification On The Regulatory Restrictions Applicable To Stock Brokers Undertaking NBFC Activities

SEBI, by letter dated 10.08.2026¹ (“Informal Guidance”), as a reply to letter for request for informal guidance dated 20.04.2026 (“Informal Guidance Request”), has clarified that a stock broker registered with SEBI may not undertake activities as a non-banking financial company (“NBFC”).

Relitrade Stock Broking Private Limited by informal guidance requested SEBI to provide guidance under SEBI (Informal Guidance) Scheme, 2025 on whether a singular corporate entity can simultaneously hold SEBI stock broker registration and NBFC registration under SEBI (Stock Brokers) Regulations, 2026 (“Stock Brokers Regulation”), which allows stock brokers to carry out activities under the regulatory framework of any other financial sector regulator or authority as may be specified by SEBI.

SEBI, by way of Informal Guidance has stated that since SEBI has not issued any framework or circular in terms of the Stock Brokers Regulation with respect to carrying out activities of NBFC by a stock broker, a stock broker may not undertake such activities under the present regulatory framework. SEBI has also placed reliance upon Rule 8(1)(f) and Rule 8(3)(f) of the Securities Contracts (Regulation) Rules, 1957 which state that a stock broker is not authorised to engage in any business other than that of securities except as a broker or agent not involving any personal financial liability.

Footnote

^{1 SEBI clarification regarding the prohibition on stock brokers engaging in NBFC activities.}

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