SEBI circular on -Guidelines for Custodians

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Date of Issue: 04-03-2026  
         
Issuer: SEBI

Guidelines for Custodians

Highlights of  SEBI notice dated March-04 -2026

• Issued pursuant to amendments in SEBI (Custodian) Regulations, 1996 dated Sept 18, 2025.

• Segregation of Activities:

  • Non-bank custodians must undertake SEBI-regulated and unregulated financial services through separate SBUs.

  • Separate accounts & net worth compliance required.

  • Disclosure & client acknowledgement mandatory for unregulated services.

• Outsourcing:

  • Core activities cannot be outsourced.

  • CDSSF to finalize list of core/non-core activities in consultation with SEBI.

• Vault Requirement:

  • No vault required if no physical securities held.

  • If held, vault/safe storage mandatory with disclosure & client consent.

• Governance & Risk Management:

  • Mandatory Board Committees (Audit, Risk, NRC, etc.).

  • Well-documented Risk Management Policy required.

  • Senior officer to oversee risk management.

• Technology & Infrastructure:

  • System capacity must handle 1.2x average transaction load of previous year.

  • Policy for scalable infrastructure required.

• Wind Down Framework:

  • Custodians must implement orderly wind-down & client portability framework.

• Business Continuity Plan (BCP):

  • Comprehensive BCP & DR setup required.

  • DR site preferably in different seismic zone / minimum 250 km distance.

  • Annual DR drills mandatory.

• Reporting Relaxation:

  • Certain duplicate AUC reports to SEBI discontinued (ease of doing business).

• Effective Date:

  • Applicable from March 24, 2026 (with phased timelines for wind-down & DRS setup).