Review of norms for utilization of interest or income from IPF of the Depositories
Summary
This circular modifies the utilization norms for interest and income generated from the Investor Protection Fund (IPF) of Depositories. It mandates that at least 95% of such annual income must be ploughed back into the IPF corpus to strengthen it. The remaining maximum 5% may be utilized for specific administrative, statutory, and employee-related expenses.
Text
The provisions under clause 4.46.1.1(B)(i)(c) and 4.46.1.1(C)(i)(2) of Section 4 of the Master Circular dated December 03, 2024 shall stand modified as under.
At least 95% of the interest or income received every year out of any investments made from the IPF shall be contributed by the Depository to the IPF.
To further strengthen the corpus, at least 95% of interest or income from IPF received every year shall be ploughed back to IPF.
A maximum of 5% of interest or income from investments of the IPF received during the financial year may be utilized to meet expenses related to dedicated employees of IPF Trust, other administrative and statutory expenses such as applicable taxes, audit fees and charity commissioner’s fee, etc.
In case the expenses exceed the above limit, such excess expenses shall be borne by the depository and in case of non-utilization of such amount in the same financial year, the same shall be ploughed back to IPF.
The provisions of the circular shall be applicable with effect from September 01, 2026.
The MIIs are directed to take necessary steps and put in place necessary systems for the implementation of the above.
Make necessary amendments to the relevant bye-laws, rules and regulations, wherever applicable, for the implementation of the above.
Bring the provisions of this circular to the notice of market participants (including investors) and also disseminate the same on their website.
This circular is issued in exercise of the powers conferred under Section 11(1) of the Securities and Exchange Board of India Act 1992 read with Section 26(3) of the Depositories Act, 1996 and Regulation 97 of Securities and Exchange Board of India (Depositories and Participants) Regulations, 2018.
Source: SecMarx — Review of norms for utilization of interest or income from IPF of the Depositories. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.