SEBI Announces Phased Restructuring of Major Indian Banking Indices

October 30, 2025 – India’s markets regulator, Securities and Exchange Board of India (SEBI), announced a phased restructuring of key banking and financial indices, including:

• NSE’s Nifty Bank (.NSEBANK)
• BSE’s Bankex (.BSEBANK)
• NSE’s Nifty Financial Services (.NIFTYFIN)

The move affects indices linked to derivatives contracts, aiming to improve broad-based representation and reduce vulnerability to market manipulation.

---

Timeline for Index Adjustments

According to the SEBI circular:

• Bankex and Nifty Financial Services: Will become more broad-based by December 2025. The weightage of individual constituent stocks will be adjusted in one tranche.
• Nifty Bank: Will undergo weightage adjustments over four monthly tranches, completing the restructuring by March 2026.

“These adjustments are intended to reduce susceptibility to external interference and improve index resilience,” SEBI noted.

---

Background: Preventing Market Manipulation

Earlier in August 2025, SEBI had proposed a phased approach for restructuring equity indices linked to derivatives contracts. The goal is to prevent market manipulation and undue concentration risks in key indices.

The need for this restructuring follows regulatory action taken in July 2025, when U.S.-based trading firm Jane Street was temporarily suspended over its trading practices in a major Indian index. Analysts believe these measures are critical for enhancing market integrity and transparency.

---

Implications for Investors and the Market

The phased restructuring is expected to:

• Enhance broad-based representation of banking and financial indices
• Reduce weight concentration in a few large stocks
• Limit potential manipulation in derivatives-linked trading

Market participants and fund managers tracking these indices will need to adjust their portfolios according to the new weightages, especially for derivatives and index-linked investment products.

---

Conclusion

SEBI’s decision to restructure Nifty Bank, Bankex, and Nifty Financial Services indices represents a major step toward improving the resilience and transparency of India’s financial markets. With completion expected by March 2026, the phased approach balances market stability with investor protection, ensuring long-term confidence in derivatives-linked indices.