SEBI proposal lets depositories use investor protection fund income for administrative expenses

SEBI has directed depositories to put in place the necessary systems for implementation, amend their bye-laws, rules and regulations wherever required and bring the revised provisions to the notice of market participants

The Securities and Exchange Board of India (SEBI) on Tuesday allowed depositories to utilise up to 5 per cent of the annual interest or income earned from Investor Protection Fund (IPF) corpus to meet certain operational expenses.From September onwards, depositories can use the interest or income generated from the IPF towards expenses related to dedicated employees of the respective IPF trusts, as well as administrative and statutory costs such as taxes, audit fees and charity commissioner fees.“In case the expenses exceed the above limit, such excess expenses shall be borne by the depository and, in case of non-utilisation of such amount in the same financial year, the same shall be ploughed back into the IPF,” SEBI said.Earlier, the entire interest or income earned from such investments were treated as part of the IPF corpus.Corpus allocationUnder the revised framework, at least 95 per cent of the annual interest or income earned from IPF investments must be ploughed back into the IPF corpus.SEBI has directed depositories to put in place the necessary systems for implementation, amend their bye-laws, rules and regulations wherever required and bring the revised provisions to the notice of market participants, including investors, while also publishing them on their websitesPublished on July 7, 2026