New Delhi, July 2 -- Months after the Securities and Exchange Board of India (Sebi) curbed speculative trading in equity derivatives, India's largest discount brokers are doubling down on margin trading facilities (MTF) to diversify revenue and shore up bottom lines.

The shift comes amid rising concerns that the current surge in leveraged cash-market positions could turn MTF into a source of systemic risk. Yet, instead of curbing the product as it did with derivatives, Sebi is proposing measures to strengthen and expand the rapidly growing market.

India's MTF book, which lets investors buy shares using broker-funded loans, hit a record Rs.1.27 trillion in May, up 65% year-on-year and 11% over April, according to CareEdge Ratings. The gr...