RBI raises IPO financing limit to ₹25 lakh, loan against shares to ₹1 cr

In a potential boost to the primary markets, the Reserve Bank of India (RBI) on Wednesday announced a proposal to raise the limits on initial public offering (IPO) financing and loans against shares (LAS) provided by banks.

 

This move is expected to encourage greater participation by high-net-worth individuals (HNIs) and deepen engagement in the primary market.

 

The lending limit for financing IPOs will be raised from ₹10 lakh to ₹25 lakh per individual. Additionally, the limit on LAS will increase sharply from ₹20 lakh to ₹1 crore. Higher limits will also be extended to units of Real Estate Investment Trusts (Reits) and Infrastructure Investment Trusts (InvITs).

 

“Loans against shares and IPO financing existed earlier, but were not revised for many years. It is only natural that these limits be updated,” RBI Governor Sanjay Malhotra said during the press briefing.

 

Deputy Governor M Rajeshwar Rao noted that the banking system’s risk-handling capacity has improved over time and the necessary provisions are in place. “The last revision of the loan against shares limit was in 1998, so considering inflation, this increase is not very significant,” he added.

 

According to the RBI bulletin, banks’ advances to individuals against shares and bonds stood at ₹9,730 crore as of July 2025, while non-banking financial companies (NBFCs) had extended ₹22,432 crore as of December 2024.

 

The RBI has also proposed removing the regulatory ceiling on lending against listed debt securities. Furthermore, it plans to introduce a “principle-based” framework for lending to capital market intermediaries.

 

These measures are expected to enhance participation, especially by smaller investors, ultimately providing a boost to capital market activity. 

 

“The primary market has been buoyant recently. IPO financing will help upcoming IPOs raise the required capital, giving a new impetus to the capital market,” said Kranthi Bathini, director -Equity Strategy, WealthMills Securities.

 

The RBI measures come at a time when primary market activity is set to accelerate. Mega share sales of Tata Capital and LG Electronics India are scheduled to hit the market in the coming week, with more $1billion-plus IPOs waiting in the wings. IPO financing can help boost subscriptions in the high networth individual category.

 

C R Chandrasekar, CEO of DhanLAP, said that while NBFCs currently face no such limits, the RBI’s announcement will widen banks’ lending capacity.

 

“With the ₹20 lakh cap, banks were not a preferred option for many HNI customers who chose NBFCs instead. Now, loans against shares could become a viable alternative, especially for those leveraging margin funding from brokers,” he said.

 

Industry experts highlight that under RBI regulations, loans typically cover only 50 per cent of the value of equity shares. Banks and NBFCs hold the pledged shares in their name and release them once the loan is repaid. During the loan tenure, customers cannot sell their shares, but continue to receive all corporate benefits, including dividends.