Representative image of SEBI head office.
Credit: PTI Photo
Markets regulator Securities and Exchange Board of India (SEBI) on Wednesday proposed changes to the regulatory framework for custodians, including doubling their minimum net worth requirement.
Custodians provide services such as safekeeping of assets and maintenance of securities accounts for clients like foreign portfolio investors, mutual funds, and portfolio managers.
Currently, India has 17 registered custodians.
Assets under their custody jumped to 278.5 trillion rupees by September 2024 from 2.7 trillion rupees in 2002.
Given the substantial growth, the SEBI has proposed to bring regulations in line with those for stock brokers.
It has proposed that custodians should have a minimum net worth of 1 billion rupees ($11.9 million) against 500 million rupees currently.
SEBI has also proposed a framework for orderly winding down of these firms, in line with that for stock brokers.
It has suggested new frameworks for business continuity planning and disaster recovery for custodians.
Other proposals include doing away with the requirement for vaults for custodians who do not hold physical assets.
The regulator has sought public comments on the proposals by November 28.