SEBI Proposes Amendment to Allow Depositories to Utilize Portion of Interest on Public Funds for Administrative Purposes
SEBI Proposes Changes to Investor Protection Fund Framework
Market regulator SEBI has issued a consultation paper proposing changes to the Investor Protection Fund (IPF) framework for depositories. The proposed framework aims to bring depositories closer to the rules already applicable to stock exchanges, allowing them to use a limited portion of the income earned from their IPF corpus to meet administrative and operational expenses related to investor protection activities.
Currently, depositories such as NSDL and CDSL are required to reinvest 100 percent of the interest or income generated from their IPF corpus back into the fund, while bearing all associated administrative expenses from their own resources. Under the proposed framework, depositories would be permitted to utilize up to 5 percent of the annual interest or income earned from IPF investments to cover expenses linked to the functioning of their IPF trusts. These expenses include costs related to dedicated employees, audit fees, statutory charges, taxes, and charity commissioner fees.
The proposed changes seek to align the treatment of depositories with that of stock exchanges, which are already permitted to use up to 5 percent of the income generated from IPF investments for similar purposes. This move aims to create operational consistency across market infrastructure institutions.
As of March 31, 2026, the IPF corpus stood at Rs 87.78 crore for NSDL and Rs 95.18 crore for CDSL. The IPF corpus is meant to support investor education and awareness initiatives, assist Depository Participants in conducting outreach programmes, and compensate investors in certain cases where claims are not settled through indemnity insurance mechanisms.
SEBI has invited public comments on the proposal until June 1, 2026. Market participants and stakeholders can submit their feedback through the regulator’s public consultation portal or via email.
Key Statistics
| Institution | IPF Corpus (Rs. crore) |
|---|---|
| NSDL | 87.78 |
| CDSL | 95.18 |
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