Authority: Nodal Co-ordination Cell, Securities and Exchange Board of India (SEBI)

Order Date: August 10, 2026

Case Overview

This document is an interpretive letter issued by SEBI in response to a request for informal guidance from Relitrade Stock Broking Private Limited. The applicant, a SEBI-registered stock broker and depository participant, sought clarification on whether it could add Non-Banking Financial Company (NBFC) activities to its existing business within the same corporate entity. The request was made under the SEBI (Informal Guidance) Scheme, 2025. The applicant's query was necessitated by Regulation 12 of the SEBI (Stock Brokers) Regulations, 2026, which permits a stock broker to carry out activities under another financial sector regulator (like RBI) in a "manner specified by the Board," though this manner remains undefined. The applicant posed four specific queries regarding dual registration, internal controls, net worth computation, and material change notification.

SEBI's analysis focused on the current regulatory framework. It noted that Regulation 12(1) of the Stock Brokers Regulations allows for activities under other regulators only as specified by SEBI. The authority highlighted that, to date, SEBI has only permitted activities related to the NDS-OM platform for Government Securities (under RBI) and activities in the GIFT-IFSC (under IFSCA), via circulars dated February 11, 2025, and May 02, 2025. Crucially, SEBI stated that it has not issued any framework or circular permitting a stock broker to carry out NBFC activities. Furthermore, SEBI cited Rule 8(1)(f) and 8(3)(f) of the Securities Contracts (Regulation) Rules, 1957, which state that a stock broker is not authorized to engage in "any business other than that of securities except as a broker or agent not involving any personal financial liability." Based on this, SEBI concluded that a stock broker may not undertake NBFC activities under the current regulatory framework.

Final Outcome

SEBI denied the request for guidance, effectively rejecting the applicant's proposal to operate an NBFC within its existing stock broking entity. The authority clarified that no regulatory pathway exists for such an integration. The letter concludes by stating that this guidance is based solely on the representations made and does not express a decision of the SEBI Board, nor does it preclude the applicant from seeking other legal opinions.

Topics: SEBI Regulation, Stock Broker Compliance, NBFC Licensing