Sebi Tightens Grip: New Custodian Net Worth Norms Unveiled

The Securities and Exchange Board of India (Sebi) has taken a significant step to strengthen risk management systems by raising the minimum net worth requirement for custodians. The threshold has surged from Rs 50 crore to Rs 75 crore, marking a notable shift in regulatory landscape.

Sebi has provided existing custodians a transition period of three years to align with the newly mandated net worth requirement. This adjustment is detailed in a notification dated September 18, whereby custodians are also bound to maintain a robust governance structure and establish effective risk management policies.

Furthermore, custodians have been cautioned against engaging in any practices that might result in unfair competition. They must exhibit internal control and operational capabilities to prevent financial losses and ensure the integrity of their operations. Sebi's amendments underline the importance of custodians in safeguarding investor assets and upholding compliance standards for foreign portfolio investors and other entities.

(With inputs from agencies.)