The Securities and Exchange Board of India has asked the Reserve Bank of India to look into whether some large non-banking finance companies are following the latter's norms while extending loans against shares.
The apex bank is already studying whether banks have been following norms and whether there has been any misuse of the facility to extend loans to market players.
Sebi is also independently trying to verify whether NBFCs are extending loans to persons without the required margins. There are fears that the market surge is being fuelled by operators leveraging funds to take huge positions.
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"NBFCs do not come under our jurisdiction. So we have asked the RBI to verify their role. On our own also, we are checking informally on any unusual trend. These are large entities and we believe are active in the loan-against-shares business," said a Sebi source.
The RBI has sought details from relevant authorities like the depository on whether banks have been following norms in giving loans against demat shares.
It held a meeting with several banks on Thursday to take stock of the situation.