The compliance with the deposit requirement is among the situations for the registration as IA or RA. This requirement must be fulfilled on a steady foundation to maintain the registration in power.
At present, they’re required to adjust to this requirement by June 30, 2025.
Nevertheless, Sebi has acquired representations from IAs and RAs, whereby they highlighted about going through sensible points about opening fastened deposit accounts and a lien marking the identical in favour of the Administration and Supervisory Physique.
They cited difficulties akin to inconsistent procedures throughout financial institution branches, delays in issuing required paperwork, confusion round Sebi’s lien marking guidelines and restricted consciousness amongst financial institution workers. Accordingly, in its session paper, Sebi has “proposed to just accept lien marked liquid mutual fund models as deposit for compliance with the deposit requirement underneath IA Rules and RA Regulation. Lien on such models of mutual fund shall be marked for no less than one yr”. Sebi famous that liquid mutual funds are usually low-risk and simple to transform to money.
It advised that these mutual fund models could be held in Assertion of Account (SOA) or demat kind. The worth of those mutual funds, after deducting exit load and a specified haircut, might be counted towards the deposit.
The worth needs to be reviewed yearly. If it falls under the required threshold or if extra deposit is required on account of extra purchasers, the IA or RA ought to high it up by including extra.
The Securities and Trade Board of India (Sebi) has sought public feedback until Could 29 on the proposal.
