Key Takeaways
- SEBI has raised the net worth requirement for custodians from ₹50 crore to ₹75 crore.
- Existing custodians have three years to comply with the new requirement.
- New governance, compliance, and risk management obligations introduced under Regulation 19B.
- Expanded code of conduct (clauses 12–26) includes strict rules on disclosures, client protection, and corporate governance.
- Custodians must comply with SEBI, RBI, depositories, and clearing corporations’ rules.
Source: SEBI
The Securities and Exchange Board of India (SEBI) has issued the Securities and Exchange Board of India (Custodian) (Amendment) Regulations, 2025, making significant changes to strengthen governance, compliance, and financial requirements for custodians. These new regulations will come into force six months after their publication in the Official Gazette.
Key Highlights of the Amendment
| Regulation | Amendment Details |
|---|---|
| Regulation 6(1)(b) | The term “physical” has been inserted before “securities and computer” to cover physical custody explicitly. |
| Regulation 7 | Net worth requirement raised from ₹50 crore to ₹75 crore.Custodians must meet net worth norms independently of capital adequacy requirements.Existing custodians (registered before this amendment) get three years to comply and raise net worth to ₹75 crore. |
| Regulation 9(f) | Custodians can provide custodial services and other financial services.Non-banking custodians may render financial services only under conditions specified by SEBI. |
| Regulation 13 | Certain provisions of clauses (i) and (ii) will not apply to custodians, subject to SEBI conditions. |
| New Regulation 19B | Custodians must meet obligations in governance, risk management, scalable infrastructure, winding down framework, and other SEBI-specified measures. |
| Third Schedule (New Clauses 12–26) | Introduces a comprehensive code of conduct, requiring custodians to:- Follow SEBI, RBI, depositories, and clearing corporation rules.- Avoid unfair competition, exaggerated claims, or misrepresentation.- Maintain good corporate governance and internal controls.- Ensure grievance redressal and timely client communication.- Keep directors and key management “fit and proper.”- Cooperate with SEBI and disclose any legal proceedings.- Protect client interests and empower compliance officers.- Ensure senior management has access to key business information. |
What This Means
- Non-banking custodians face additional conditions if they wish to provide financial services.
- Custodians now face higher financial thresholds with the ₹75 crore net worth requirement.
- Stricter corporate governance, compliance, and risk management frameworks are mandated.
- Greater accountability and client protection are emphasized through an expanded code of conduct.
Author
FAQs
What is the new net worth requirement for SEBI-registered custodians?
The net worth requirement has been increased from ₹50 crore to ₹75 crore under the Custodian (Amendment) Regulations, 2025.
How long do existing custodians have to comply with the new net worth norms?
Existing custodians have three years from the notification date to meet the ₹75 crore net worth requirement.
What are the key governance obligations under the new Regulation 19B?
Custodians must comply with obligations on risk management, scalable infrastructure, winding down framework, and other measures specified by SEBI.
Does the new amendment include a code of conduct for custodians?
Yes, the Third Schedule (Clauses 12–26) introduces a comprehensive code of conduct covering client protection, corporate governance, internal controls, and cooperation with SEBI.
Can non-banking custodians provide financial services under the new amendment?
Yes, but non-banking custodians may render financial services only under conditions specified by SEBI.
