MUMBAI, Feb. 26 -- A Reserve Bank of India move meant to curb bank lending for speculative trading risks creating an uneven playing field in India's equity markets, with domestic proprietary traders fearing foreign rivals could gain easier access to global bank-backed funding.

The central bank's curbs on bank lending to proprietary (prop) traders are meant to prevent depositors' money from being used for speculative bets in capital markets. But market participants say differences in how banks apply collateral rules could make funding cheaper for foreign prop traders while making it harder for their Indian counterparts to access bank capital.

"The Reserve Bank of India's (RBI) directive to banks on curbing loans to proprietary traders, o...