The finance ministry has asked the Securities and Exchange Board of India and the Reserve Bank of India [Get Quote] to keep a close watch on the accounts of cooperative banks and non-banking finance companies to ensure that funds borrowed from them were not routed to the stock markets for speculative activities.

Finance ministry officials said lending by commercial banks was also under watch. During the last stock market scam in 2002, around Rs 1,500 crore (Rs 15 billion) given by commercial banks to companies in the form of working capital were invested in the stock market, they said.

"Our feeling is that NBFCs are lending to corporates, which in turn could be investing in the market," a top finance ministry official said. But he declined to identify the companies or the NBFCs that were on the market regulator's radar.

The NBFCs have already been asked to share information on their monthly accounts with the RBI. The High-Level Committee on Capital Markets has also discussed the role of NBFCs and co-operative banks in the current bull run.

While there was a perception that foreign institutional investors were responsible for the rise in the stock market indices, with the Sensex clocking 8,200 and the Nifty crossing the 2,500 mark, officials said money flowing from the domestic economy was equally responsible for this.

"We need to ensure that companies do not misuse the funds available to them. So far, we have not found anything untoward but we have alerted the stock exchanges and Sebi is also keeping a tight vigil on the situation," said an official.