SEBI has amended its Custodian Regulations of 1996, introducing several key changes that will take effect in six months. The primary amendment raises the minimum net worth requirement for custodians from Rs. 50 crore to Rs..75 crore. Existing custodians have a period of three years from the date of the amendment’s commencement to meet this new capital adequacy standard, which must be maintained separately from other business requirements. Additionally, the new regulations clarify that custodians can now offer a range of other financial services. This is subject to SEBI-specified conditions, particularly for those not affiliated with a banking company. The updated framework also introduces a new section outlining custodians’ responsibilities, including maintaining an appropriate governance structure, risk management policies, and operational infrastructure. It also mandates that all directors and key management personnel must be “fit and proper persons” at all times and that the custodian must cooperate with SEBI and protect client interests.
SECURITIES AND EXCHANGE BOARD OF INDIA
NOTIFICATION
Mumbai, the 18th September, 2025
SECURITIES AND EXCHANGE BOARD OF INDIA (CUSTODIAN) (AMENDMENT) REGULATIONS, 2025
No. SEBI/LAD-NRO/GN/2025/267.—In exercise of the powers conferred by section 30 of the Securities and Exchange Board of India Act, 1992 (15 of 1992), the Board hereby makes the following regulations to further amend the Securities and Exchange Board of India (Custodian) Regulations, 1996, namely –
1. These Regulations may be called the Securities and Exchange Board of India (Custodian) (Amendment) Regulations, 2025.
2. They shall come into force upon the completion of six months from the date of publication of these regulations in the Official Gazette.
3. In the Securities and Exchange Board of India (Custodian) Regulations, 1996, –
I. In regulation 6, in sub-regulation (1), in clause (b), after the words “safe custody of” and before the words “securities and computer”, the word “physical” shall be inserted.
II. In regulation 7, –
i. in sub-regulation (1), the word “fifty” shall be substituted with the word “seventy-five”;
ii. after sub-regulation (1), the following provisos shall be inserted, namely, –
“Provided that the custodian shall fulfill the net worth requirements under these regulations, separately and independently, of the capital adequacy requirements, if any, for each activity undertaken by it under the relevant regulations.
Provided further that a custodian, who was granted a certificate of registration prior to the commencement of the Securities and Exchange Board of India (Custodian) (Amendment) Regulations, 2025, shall, within three years from such commencement, raise its net worth to not less than seventy-five crore rupees, separately and independently, of the capital adequacy requirements, if any, for each activity undertaken by it under the relevant regulations.”
III. In regulation 9, clause (f) shall be substituted with the following, namely, –
“(f) besides providing custodial services, it may carry on any activity relating to rendering of financial services;
Provided that a custodian who is not a banking company as defined under the Banking Regulations Act, 1949 or a subsidiary/associate/joint venture of such banking company may render such financial services subject to conditions as may be specified by the Board.”
IV. In regulation 13, after clause (ii), the following proviso shall be inserted, namely, –
“Provided that the provisions of clause (i) and (ii) shall, subject to such conditions as may be specified by the Board, not apply to a Custodian.”
V. After regulation 19A and prior to regulation 20, the following regulation shall be inserted, namely, –
“Obligations and responsibilities.
19B. The custodian shall be required to meet obligations and discharge responsibilities, in the manner specified by the Board from time to time, to ensure:
1. appropriate governance structure and processes;
2. appropriate risk management policy and processes;
3. scalable infrastructure and appropriate technical capacity;
4. framework for orderly winding down; and
5. any other measure as may be specified by the Board from time to time.”
VI. In the Third Schedule, after clause 11, the following clauses shall be inserted, namely, –
“12. The custodian shall abide by the provisions of the Act, rules, regulations, circulars and directions issued by the Board and the Reserve Bank of India from time to time, as may be applicable to a custodian. The custodian shall also comply with bye-laws, rules and regulations of Depositories and Clearing Corporation as may be applicable to a custodian.
13. The custodian shall not indulge in any unfair competition, which is likely to harm the interests of other custodians or clients or is likely to place such other custodians in a disadvantageous position while competing for or executing any assignment.
14. The custodian shall not make any exaggerated statement whether oral or written to the clients either about its qualifications or capability to render certain services or about its achievements in regard to services rendered to other clients.
15. The custodian shall not make any untrue statement or suppress any material fact in any documents, reports, papers or information furnished to the Board.
16. The custodian shall ensure that good corporate policies and corporate governance are in place.
17. The custodian shall endeavour to ensure that—
a) inquiries from client are adequately dealt with.
b) grievances of client are redressed in a timely and appropriate manner.
c) where a complaint is not remedied promptly, the client is advised of any further steps which may be available to the client under the regulatory system.
18. The custodian shall have internal control procedures as well as financial and operational capabilities which can be reasonably expected to protect its operations, its clients, and other registered entities from financial loss arising from theft, fraud, and other dishonest acts, professional misconduct or omissions.
19. The custodian shall ensure that all its Directors and key management personnel are fit and proper persons at all times.
20. The custodian shall co-operate with the Board as and when required.
21. The custodian shall not neglect or fail or refuse to submit to the Board or other agencies with which it is registered, such books, documents, correspondence, and papers or any part thereof as may be demanded/requested from time to time.
22. The custodian shall ensure that the Board is promptly informed about any action, legal proceedings, etc., initiated against it in respect of material breach or non-compliance by it, of any law, rules, regulations, directions of the Board or of any other regulatory body.
23. The custodian shall be responsible for the acts or omissions of its employees and agents in respect of the conduct of its business.
24. The custodian shall make all efforts to protect the interests of its clients and shall act in the best interest of its clients.
25. The custodian shall provide adequate freedom and powers to its compliance officer for the effective discharge of his duties.
26. The custodian shall ensure that the senior management, particularly decision makers have access to all relevant information about the business on a timely basis.”
AMIT PRADHAN, Executive Director
[ADVT-III/4/Exty./372/25-26]
Footnote:
(1) The Securities and Exchange Board of India (Custodian of Securities) Regulations, 1996, the Principal Regulations were published in the Gazette of India on May 16, 1996 vide S.O. No. 344 (E).
(2) The Securities and Exchange Board of India (Custodian of Securities) Regulations,1996 were subsequently amended –
i. On December 4, 1996 by the Securities and Exchange Board of India (Custodian of Securities) (Amendment) Regulations, 1996 vide S.O. No .851(E).
ii. On October 17, 1997 by the Securities and Exchange Board of India (Custodian of Securities) (Amendment) Regulations, 1997 vide S.O. No. 732 (E).
iii. On January 5, 1998 by the Securities and Exchange Board of India (Custodian of Securities) (Amendment) Regulations, 1998 vide S.O.No.17(E).
iv. On March 28, 2000 by the Securities and Exchange Board of India (Appeal to the Securities Appellate Tribunal) (Amendment) Regulations, 2000 vide S.O.No.278(E)
v. On May 29, 2001 by the Securities and Exchange Board of India (Investment Advice by Intermediaries) (Amendment) Regulations, 2001 vide S.O.No.476(E).
vi. On September 27, 2002 by the Securities and Exchange Board of India (Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty) Regulations, 2002 vide S.O.No.1045(E).
vii. On March 10, 2004 by the Securities and Exchange Board of India (Criteria for Fit and Proper Person) Regulations, 2004 vide S.O.No.398(E).
viii. On January 12, 2006 by the Securities and Exchange Board of India (Custodian of Securities) (Amendment) Regulations, 2006 vide S.O.No.39(E).
ix. On October 31, 2006 by the Securities and Exchange Board of India (Custodian of Securities) (Second Amendment) Regulations, 2006 vide No. S.O.1860(E).
x. On March 31, 2008 by the Securities and Exchange Board of India (Payment of Fees) (Amendment) Regulations, 2008 vide F.No. 11/LC/GN/2008/21669.
xi. On July4, 2008 by the Securities and Exchange Board of India (Custodian of Securities) (Amendment) Regulations, 2008 vide No. 11/LC/GN/15/2008/130775.
xii. On June19, 2009 by the Securities and Exchange Board of India (Facilitation of Issuance of Indian Depository Receipts) (Amendment) Regulations, 2009 vide Notification No. LAD/NRO/GN/2009-2010/10/166936.
xiii. On June29, 2009 by the Securities and Exchange Board of India (Payment of Fees) (Amendment) Regulations, 2009 vide No. LAD-NRO/GN/200910/11/167759.
xiv. On May 23, 2014 by the Securities and Exchange Board of India (Payment of Fees) (Amendment) Regulations, 2014 vide No. LAD-NRO/GN/2014-15/03/1089
xv. On March 6, 2017 by the Securities and Exchange Board of India (Payment of Fees and Mode of Payment) (Amendment) Regulations, 2017 vide notification no. SEBI/LAD/NRO/GN/2016-17/037 read with notification No. SEBI/LAD/NRO/GN/2016-17/38. dated March 29, 2017.
xvi. On January 1, 2019 by the Securities and Exchange Board of India (Custodian of Securities) (Amendment) Regulations, 2018 vide notification No. SEBI/LAD/NRO/GN/2021/01.
xvii. On April 17, 2020 by the Securities and Exchange Board of India (Regulatory Sandbox) (Amendment) Regulations, 2020 vide No. SEBI/LAD-NRO/GN/2020/10.
xviii. On August 3, 2021 by the (Regulatory Sandbox) (Amendment) Regulations, 2021 vide No. SEBI/LAD-NRO/GN/2021/30.
xix. On April 25, 2022 by the Securities and Exchange Board of India (Custodian) (Amendment) Regulations, 2022 vide No. SEBI/LAD-NRO/GN/2022/81.
xx. On January 17, 2023 by the Securities and Exchange Board of India (Change in Control in Intermediaries) (Amendment) Regulations, 2023 vide No. SEBI/LAD-NRO/GN/2023/115.
xxi. On February 7, 2023 by the Securities and Exchange Board of India (Payment of Fees and Mode of Payment) (Amendment) Regulations, 2023 vide No. SEBI/LAD-NRO/GN/2023/121.
xxii. On July 4, 2023 by the Securities and Exchange Board of India (Alternative Dispute Resolution Mechanism) (Amendment) Regulations, 2023 vide No. SEBI/LAD–NRO/GN/2023/137.
xxiii. On November 28, 2024 by the Securities and Exchange Board of India (Attestation of Documents) (Amendment) Regulations, 2024 vide No. SEBI/LAD-NRO/GN/2024/212..
xxiv. On February 10, 2025 by the Securities and Exchange Board of India (Investor Charter) (Amendment) Regulations, 2025 vide No. SEBI/LAD–NRO/GN/2025/228.
