SEBI Proposes IPF Expense Utilisation Norms for Depositories

Consultation Paper; Dated: 11.05.2026

The Securities and Exchange Board of India (SEBI) has proposed a review of norms governing utilisation of interest or income earned from the Investor Protection Fund (IPF) corpus held by depositories.

1. Existing Position for Stock Exchanges

Currently stock exchanges are permitted to utilise up to 5% of interest or income earned from investments of IPF corpus. For meeting expenses relating to:

• Dedicated employees of IPF Trust
• Administration of Investor Service Centres (ISCs)
• Administrative and statutory expenses such as:

1. 1. Taxes
   2. Audit fees
   3. Charity commissioner’s fee

2. Current Position for Depositories

• No similar provision presently exists for Depositories
• Consequently 100% of interest/income from IPF investments is treated as part of the IPF corpus
• All related administrative expenses are required to be borne by the depositories from their own income

3. Background of the Proposal

• Depositories made representations seeking alignment with stock exchange norms
• The matter was discussed in Secondary Market Advisory Committee (SMAC) of SEBI

4. SEBI’s Proposal

SEBI has proposed to allow depositories to:

• Utilise up to 5% of interest or income earned from IPF investments
• For expenses relating to:

1. 1. Administration of the IPF Trust
   2. Employees and related statutory/administrative costs

5. Treatment of Excess or Unutilised Amount

• If expenses exceed the permitted 5% limit the excess must be borne by the depository itself
• If the permitted amount remains unutilised in the same financial year. It must be Ploughed back into the IPF corpus

6. Objective of the Proposal

The proposal aims to:

• Ensure regulatory parity between stock exchanges and depositories
• Support efficient administration of IPF-related functions
• Maintain protection and integrity of the IPF corpus

7. Conclusion

SEBI’s proposal seeks to create a balanced and harmonised framework for utilisation of IPF income by depositories, enabling limited use for administrative purposes while safeguarding investor protection funds.

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