SEBI Proposes Funding Depository Trust Expenses via Part of IPF Investment Income

The Securities and Exchange Board of India (SEBI) has proposed allowing depositories to use a part of the income earned from their Investor Protection Fund (IPF) corpus to meet administrative expenses linked to investor protection activities, as per PTI reports. 

The proposal was issued through a consultation paper on Monday. SEBI said depositories may be allowed to utilise up to 5% of the annual interest or income generated from investments made using the IPF corpus. 

Administrative Costs Included 

The proposed framework covers expenses related to employees working for the IPF Trust, audit fees, taxes, charity commissioner charges, and other statutory costs connected with the administration of the trust. 

SEBI stated that if the expenses exceed the proposed 5% ceiling, the additional amount will have to be paid by the depository from its own funds. Any unused amount within the limit during a financial year would be transferred back to the IPF corpus. 

At present, depositories are required to add the entire interest or income earned from the IPF back into the corpus. Administrative and operational costs linked to the IPF Trust are currently borne separately by the depositories. 

Alignment With Stock Exchange Framework 

The market regulator said the proposal is intended to bring depositories in line with the framework already followed by stock exchanges. 

Under existing rules, stock exchanges are permitted to use up to 5% of the income earned from IPF investments for expenses related to Investor Service Centres, dedicated staff and statutory payments. 

SEBI said the proposed change would create uniformity in the treatment of market infrastructure institutions handling investor protection functions. 

IPF Corpus of NSDL and CDSL 

As of March 31, 2026, the IPF corpus stood at ₹87.78 crore for National Securities Depository Limited and ₹95.18 crore for Central Depository Services (India) Limited. 

The corpus and the income generated from it are used for investor awareness programmes, educational initiatives, support for Depository Participant outreach activities and settlement of certain investor claims not covered under indemnity insurance.  

Consultation Open till June 1 

SEBI has invited comments from stakeholders and the public on the proposal till June 1, 2026. The feedback received will be considered before the framework is finalised. 

Read More: Gautam Adani Highlights AI, Energy and Compute as India’s Future Growth Pillars! 

Conclusion  

SEBI’s proposal would allow limited use of IPF income for operational expenses, while keeping the remaining corpus dedicated to investor protection and awareness activities. 

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