New Delhi, Markets regulator Sebi on Monday proposed allowing depositories to use up to 5 per cent of the interest or income earned from investments of their Investor Protection Fund (IPF) corpus to meet expenses related to the administration of the IPF Trust.
The proposal aims to align the framework for depositories with the existing provisions applicable to stock exchanges.
At present, stock exchanges are permitted to use a maximum of 5 per cent of the interest or income generated from IPF investments for meeting expenses related to dedicated employees of the IPF Trust, administration of Investor Service Centres, and other statutory and administrative expenses such as taxes, audit fees and charity commissioner fees. However, no such provision exists for depositories.
Accordingly, in its consultation paper, Sebi said,” To meet expenses related to dedicated employees of IPF Trust of the depository,other administrative and statutory expenses such as applicable taxes, audit fees and charity commissioner’s fee, etc., subject to a maximum of 5 per cent of such interest or income from investments of the IPF during the year may be permitted to be utilized by the depository”.
Sebi suggested that if the expenses exceed the 5 per cent limit, the excess amount will have to be borne by the depository concerned. Further, if the permitted amount is not fully utilised during a financial year, the unspent portion will be ploughed back into the IPF corpus.
Currently, 100 per cent of interest or income from the IPF is treated as corpus of IPF and all expenses are to be incurred by the depositories from their own income even if such expenses directly relate to IPF Trust.
As of March 31, 2026, the IPF corpus stood at Rs 87.78 crore for National Securities Depository Ltd (NSDL) and Rs 95.18 crore for Central Depository Services (India) Ltd (CDSL).
The IPF corpus and the income generated from it are currently used for investor education and awareness programmes, supporting initiatives by Depository Participants, and settling legitimate claims of beneficial owners in cases where such claims are not covered by indemnity insurance.
The Securities and Exchange Board of India (Sebi) has invited public comments on the proposal till June 1. PTI
