Here we begin the Indian version of Glass Steagall Act - more cap market exposure to banks & letting them in the investment banking game.

Seems like RBI is considering allowing 'systemically strong' Indian banks greater access to cap market then the current ceiling for stock market related activities and financing acquisition plans for Indian companies.

Strong balance sheets and risk mitigation systems are needed for RBI's go ahead. A detailed assessment of banks with justification for such a higher limit is about to begin after a detailed assessment is done- like they say, the devil is in details.

The capital market exposure of several domestic lenders including HDFC, ICICI and IDBI is getting close to the limit of 40% of their net worth as per the current guidelines - and they had requested relaxation- including considering only the DIRECT exposure as the risk component.

Direct exposure means loans for investing in shares and other capital market activity indirect exposure includes funding where shares are the primary security.

Probably this why Bank Nifty spike last week..