Quick summary
SEBI has modified the norms for utilizing interest or income from the Investor Protection Fund (IPF) of Depositories. At least 95% of such income must now be ploughed back into the IPF, while a maximum of 5% can be used for specific administrative and statutory expenses.
Who is affected
All Depositories.
What changes
The provisions under clause 4.46.1.1 (B)(i)(c) and 4.46.1.1 (C)(i)(2) of the SEBI Master Circular dated December 03, 2024, are modified as follows:
- Plough-back Requirement: At least 95% of the interest or income received every year from IPF investments must be ploughed back to the IPF to strengthen the corpus.
- Expense Limit: A maximum of 5% of the interest or income received during the financial year may be utilized for:
- Expenses related to dedicated employees of the IPF Trust.
- Administrative and statutory expenses, including applicable taxes, audit fees, and charity commissioner’s fee.
- Excess Expenses: Any expenses exceeding the 5% limit must be borne by the depository.
- Unutilized Funds: Any portion of the 5% allocation not utilized within the same financial year must be ploughed back to the IPF.
Action items
Depositories are directed to:
- Implement necessary systems for the execution of these modified norms.
- Amend relevant bye-laws, rules, and regulations where applicable.
- Notify market participants, including investors, regarding these provisions and disseminate the information on their website.
Key dates-deadlines
The provisions of the circular are applicable with effect from September 01, 2026.
Source reference
HO/47/14/13(4)2026-MRD-POD3/ I/15577/2026, July 07, 2026