Deposit requirement for Investment Advisers (IA)

SEBI has introduced the deposit requirement for Investment Advisers (IA) vide its circular no. SEBI/HO/MIRSD/MIRSD-PoD-1/P/CIR/2025/003 dated January 08, 2025.

1) As per the aforesaid SEBI circulars, the deposit requirement details are as follows:

a) The deposit requirements for IAs shall be based on the maximum number of clients of the IAs on any day of the previous financial year, as under:

b) The deposit shall be maintained with a scheduled bank with lien marked in favor of IAASB, in the manner and form as may be specified by IAASB i.e. BSE Limited.

c) The deposit amount may be revised for any change in applicable amount of deposit, based on the maximum number of clients in the previous financial year, at the latest by 30th April of the subsequent financial year.

d) The deposit requirements shall be reviewed by SEBI from time to time.

e) The existing IAs shall ensure compliance with the deposit requirement, at the latest by June 30, 2025, and the new applicants seeking registration as IA, the deposit requirement shall become effective immediately from the date of this circular.

2) In accordance with the point no.(b) stated above, the manner and form in which the deposit/s are proposed to be accepted from IAs is as follows:

a) The Fixed Deposit (FD) to be issued in the name of “BSE Ltd. A/c._______________________________________________________________ (Name of IA)”

b) FD may be maintained with any of the banks mentioned as per Annexure-1 (List of Banks) with lien marked in favor of “BSE Limited”.

c) The term of FD shall be for 5 years or more. Please instruct the Bank to auto renew the principal amount of the FD with the interest to be credited to the account of the IA. In case instruction is not given to the Bank, the principal along with the accrued interest shall be renewed by the Bank on maturity of the FD.

d) IAs shall share soft copy of the Fixed Deposit Receipt (FDR) on email [email protected] and mention in the subject “FDR towards deposit –

_______ (name of the entity)”. The original FDR shall be duly discharged by affixing revenue stamp of Rs.1 /- on the reverse of the FDR signed and stamped by the authorized signatory. Such original FDR along with the FDR letter from the Bank and covering letter Annexure – 2 shall be sent by the IAs to BSE’s regional / head office as per Annexure – 3.

e) Format of the FDR letter to be issued by the Bank as prescribed by the Exchange is attached as Annexure-4.

f) The FDR shall be auto renewal by the Bank. The Bank renews the FD on the maturity date. IAs shall instruct the Bank in advance for the issuance of renewal letter as per the prescribed format as per Annexure-5 which shall be submitted by the IA with the Exchange.

g) BSE shall send alerts/reminder mails to IAs to ensure renewal of the FDRs on time.

h) Based on the maximum number of clients available with lAs in the previous financial year, the deposit amount shall be modified as follows:

(i) In the event of an increase in the number of clients, IA will have an option to provide a new FDR with an additional amount or provide a new FDR with the consolidated amount as per the applicable deposit requirement.

(ii) Upon receipt of the original FDR with the consolidated amount, the old FDR shall be released by the Exchange.

(iii) In case of reduction in the number of clients, IA can provide new FDR with the reduced deposit requirement as stated above or continue to maintain the earlier deposit. In case IA provides the new FDR with a revised amount, their old FDR shall be released by the Exchange.

i) Such a deposit shall be available for utilization in case the IA fails to pay dues emanating out of arbitration and conciliation proceedings, if any, under the Online Dispute Mechanism or such other mechanism as may be specified by the Board.