SEBI Plans New IPF Expense Rules For NSDL And CDSL

India’s capital markets regulator has proposed a key change in how depositories manage investor protection funds, allowing them to use a small part of the income earned on these funds for administrative expenses.

The proposal, released by the Securities and Exchange Board of India (SEBI) on Monday, would permit depositories to utilise up to 5% of the annual income generated from Investor Protection Fund (IPF) investments for operational costs.

The proposal applies to depositories such as National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL). As of 31 March 2026, the IPF corpus stood at ₹87.78 crore for NSDL and ₹95.18 crore for CDSL.

Why Has SEBI Proposed The Change?

At present, depositories are required to add 100% of the income earned from IPF investments back into the fund. Any administrative or statutory expenses linked to the IPF Trust have to be paid separately by the depositories from their own income.

SEBI said the proposed framework aims to bring depositories in line with rules already followed by stock exchanges. Exchanges are currently allowed to use up to 5% of the interest or income generated from IPF investments for administrative expenses.

Under the proposal, depositories would be allowed to use part of the annual income from IPF investments to cover expenses related to dedicated employees, audit fees, taxes and charity commissioner fees.

Also Read - SEBI Plans Faster AIF Scheme Launches Through GARUDA Framework

What Happens If Expenses Cross The Limit?

The regulator clarified that any expense above the proposed 5% ceiling would still need to be borne by the depository concerned. It also said any unused amount from the permitted limit would be transferred back into the IPF corpus at the end of the financial year.

SEBI has invited public comments on the proposal until 1 June, 2026.

Sources:

Moneycontrol

The Economic Times