SEBI Circular on Review of norms for utilization of interest or income from IPF of the Depositories

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Date of Issue: 07-07-2026

Highlights of  the Circular :

Key Change

SEBI has revised the rules governing how interest or income earned from investments made out of the Investor Protection Fund (IPF) can be utilized by depositories.

Earlier Provision

• 100% of the interest/income earned from IPF investments had to be added back to the IPF corpus, with no portion available for administrative expenses.

Revised Provision

• At least 95% of the annual interest/income earned from IPF investments must be ploughed back into the IPF corpus.
  
  
• Up to 5% of such annual interest/income may be used to meet:
•  
  • Salary and expenses of dedicated IPF Trust employees,
    
    
  • Administrative expenses,
    
    
  • Statutory expenses such as applicable taxes, audit fees, Charity Commissioner fees, etc.
    
    
• If these expenses exceed the 5% limit, the excess must be borne by the depository.
  
  
• Any unused portion of the 5% in the same financial year must also be transferred back to the IPF corpus.

Reason for the Change

The amendment was made after:

• Representations received from depositories,
  
  
• Discussions in SEBI's Secondary Market Advisory Committee (SMAC),
  
  
• Public consultation, and
  
  
• Internal deliberations,

with the objective of ensuring uniformity and consistency in the utilization of IPF income across depositories and stock exchanges.

Effective Date

The revised provisions will come into force from September 1, 2026.

Directions to Depositories

Depositories are required to:

• Put in place the necessary systems for implementation,
  
  
• Amend relevant bye-laws, rules, and regulations where required, and
  
  
• Inform market participants and publish the circular on their websites.