SEBI allows depositories to spend up to 5% of IPF income on admin costs
Depositories can now use up to 5% of interest earned on IPF investments for trust expenses, with at least 95% still going to the corpus. The change follows SMAC recommendation and public consultation.
What changed
- SEBI revised IPF norms: at least 95% of interest/income from IPF investments must be ploughed back to corpus.
- Up to 5% may be used for IPF Trust administrative and statutory expenses.
- Excess expenses beyond the 5% cap must be borne by the depository.
The read
SEBI has tweaked the way depositories handle interest from the Investor Protection Fund. Previously, every rupee of investment income had to reinforce the corpus. Now, up to 5% can be siphoned off for administrative and statutory costs of the IPF Trust — employees, audit fees, charity commissioner charges. The change follows a recommendation from the Secondary Market Advisory Committee and public consultation. It is a modest concession: the floor remains 95% for ploughback. Any expense beyond the cap must be paid by the depository itself. For investors, the move is invisible; the protection fund's corpus continues to grow at nearly the same pace. The real effect is operational breathing room for NSDL and CDSL in running a trust that otherwise had to absorb costs entirely from their own pockets.
Primary source: official circular (PDF)