SEBI Allows Depositories To Use 5% of IPF Investment Income For Administrative Expenses

The Securities and Exchange Board of India (SEBI) on Tuesday allowed depositories to utilise up to 5% of the annual interest or income earned from Investor Protection Fund (IPF) investments towards specified administrative and statutory expenses.

This replaces the existing requirement that the entire interest or income earned from such investments be treated as part of the IPF corpus.

The revised norms will come into effect from September 1, 2026.

SEBI said the review was undertaken after receiving representations from depositories seeking changes to the existing requirement and to bring uniformity and consistency in provisions governing the utilisation of IPF interest or income across depositories and stock exchanges.

Under the revised framework, at least 95% of the annual interest or income earned from IPF investments must be ploughed back into the IPF corpus. Up to 5% may be utilised towards expenses related to dedicated employees of the IPF Trust and other administrative and statutory costs, including applicable taxes, audit fees, and the Charity Commissioner's fee.

Any expenditure beyond the 5% limit must be borne by the depository. Any unutilised portion of the 5% must be ploughed back into the IPF.

The circular directs 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 websites.