Sebi Proposes New Guidelines for Depositories on Investor Protection Fund Expenses
Depositories can use part of IPF corpus income for trust costs
The Economic Times
Image: The Economic Times
The Securities and Exchange Board of India (Sebi) has proposed allowing depositories to use up to 5% of the annual income from their Investor Protection Fund (IPF) corpus to cover administrative costs. This change aims to align depository operations with existing rules for stock exchanges, ensuring better management of funds.
- 01Sebi's proposal allows depositories to use part of IPF income for administrative expenses.
- 02Up to 5% of annual income can be allocated for trust-related costs.
- 03As of March 31, 2026, NSDL's IPF corpus is ₹87.78 crore and CDSL's is ₹95.18 crore.
- 04Any expenses exceeding 5% must be covered by the depositories themselves.
- 05This move aims to streamline financial management within depositories.
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The Securities and Exchange Board of India (Sebi) has proposed a new framework that permits depositories to allocate a portion of their Investor Protection Fund (IPF) corpus income for covering administrative and statutory expenses related to IPF trusts. This proposal aims to align the operational guidelines of depositories with those already established for stock exchanges. As of March 31, 2026, the IPF corpus stood at ₹87.78 crore for the National Securities Depository Limited (NSDL) and ₹95.18 crore for the Central Depository Services Limited (CDSL). Under the new guidelines, depositories can utilize up to 5% of the annual interest or income generated from the IPF corpus for expenses such as salaries for dedicated IPF trust employees, audit fees, applicable taxes, and charity commissioner fees. However, if the administrative costs exceed this limit, the depositories will be responsible for covering the excess amount.
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This proposal may lead to more efficient fund management within depositories, potentially resulting in better services for investors and reduced operational hurdles.
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