The Securities and Exchange Board of India (SEBI) has issued a significant circular aimed at modernizing and streamlining the dispatch of Consolidated Account Statements (CAS) and holding statements. In line with the increasing adoption of digital technology and as a part of green initiatives, SEBI has mandated the use of email as the default mode of communication for CAS by Depositories, Mutual Fund Registrar and Transfer Agents (MF-RTAs), and Depository Participants (DPs). This move, outlined in SEBI circular SEBI/HO/MRD-PoD2/CIR/P/2024/93 dated July 01, 2024, is set to take effect from August 01, 2024.
Background and Objectives
SEBI’s circular addresses the evolving landscape of digital communication, acknowledging that electronic modes have become the preferred choice for most investors. The primary objectives are to enhance efficiency, reduce environmental impact, and ensure that regulatory guidelines keep pace with technological advancements. By making email the default mode for CAS dispatch, SEBI aims to streamline processes and provide investors with more timely and convenient access to their account statements.
Key Provisions
1. Email as Default Mode: The Securities and Exchange Board of India (SEBI) has mandated that Consolidated Account Statements (CAS) will now be primarily dispatched via email to all investors who have registered email addresses. This move aims to streamline communication and reduce paper usage. Investors who prefer physical copies can still opt to receive them upon request. Additionally, quarterly SMS notifications will be sent to investors, confirming the email address used for CAS dispatch, ensuring clarity and verification.
2. Frequency of CAS Dispatch: CAS will be dispatched with varying frequencies based on account activity. Investors with transactions in their demat or mutual fund accounts will receive monthly CAS via email, ensuring regular updates on their holdings. Those without recent transactions will receive half-yearly statements to keep them informed. Accounts with no transactions and nil balances will receive annual statements via email, maintaining compliance with regulatory requirements while minimizing paper usage.
3. System and Regulatory Adjustments: SEBI has directed depositories to make necessary amendments to their bye-laws, rules, and regulations to support the new default mode of CAS dispatch via email. This includes implementing required system changes to ensure seamless email delivery and compliance with regulatory guidelines. Circulars detailing these provisions will be published on depositories’ websites for transparency. Monthly Development Reports to SEBI will include status updates on the implementation of these provisions, ensuring accountability and regulatory oversight.
4. Legal and Regulatory Framework: The issuance of this circular falls under SEBI’s authority as per Section 11(1) of the SEBI Act, 1992, and Section 19 of the Depositories Act, 1996. These provisions are designed to safeguard investors’ interests while promoting the orderly development and regulation of the securities market. By standardizing CAS dispatch via email, SEBI aims to enhance investor convenience, operational efficiency, and environmental sustainability in the financial sector.
Conclusion
SEBI’s mandate for email as the default mode for CAS dispatch is a forward-thinking move that aligns with global trends in digital communication and sustainability. This initiative not only simplifies the process for investors but also supports environmental conservation efforts by reducing paper usage. As the effective date approaches, it is crucial for all relevant entities to make necessary adjustments and ensure compliance. This regulatory update underscores SEBI’s commitment to leveraging technology for the benefit of investors and the overall efficiency of the securities market.
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Securities and Exchange Board of India
Circular No. SEBI/HO/MRD-PoD2/CIR/P/2024/93 Dated: July 01, 2024
To,
The Depositories,
Asset Management Companies,
Mutual Fund- Registrar and Transfer Agents (MF-RTAs),
Depository Participants (DPs)
Dear Sir / Madam,
Subject: Dispatch of Consolidated Account Statement (CAS) for all securities assets
1. Considering the increasing reach of digital technology, electronic mode now being the preferred mode of communication and as a green initiative measure and to streamline the regulatory guidelines on mode of dispatch of account statements, it has been decided to revisit the regulatory provisions and provide for email as default mode of dispatch for Consolidated Account Statement (CAS) by Depositories, Mutual Fund – Registrar and Transfer Agents (MF-RTAs) and holding statement by Depositories Participant (DP).
2. Accordingly, para 1.24.6, para 1.24.12, para 1.8.5, para 1.8.6 and Para 14 & 15 under the head ‘Statement of Account’ in Annexure 3 of SEBI Master Circular on Depositories dated October 06, 2023 stands modified as given in Annexure-A.
3. The circular shall be effective from August 01, 2024
4. The Depositories are directed to:
i. make amendments to the relevant bye-laws, rules and regulations for the implementation of the above decision, as may be applicable/necessary;
ii. to carry out system changes, if any, to implement the above;
iii. disseminate the provisions of this circular on their website;
iv. communicate to SEBI, the status of implementation of the provisions of this circular in their Monthly Development Report.
5. This circular is issued in exercise of powers conferred under Section 11 (1) of the Securities and Exchange Board of India Act, 1992 read with Section 19 of the Depositories Act,1996 to protect the interests of investors in securities and to promote the development of, and to regulate the securities market.
6. This circular is issued with the approval of competent authority.
7. This circular is available on SEBI website at sebi.gov.in under the category “Circulars”.
Yours faithfully,
Vishal Shukla
General Manager
Market Regulation Department
Email: vishals@sebi.gov.in
Phone number:022-26449959
Annexure-A
Modifications in paras of SEBI Master Circular on Depositories dated October 06, 2023.
Para 1.24.6
The CAS shall be dispatched by email to all the investors whose email addresses are registered with the Depositories and AMCs/MF-RTAs. However, where an investor does not wish to receive CAS through email, option shall be given to the investor to receive the CAS in physical form at the address registered with the Depositories and the AMCs/MF-RTAs. The depositories shall also intimate the investor on quarterly basis through the SMS mode specifying the email id on which the CAS is being sent.
Para 1.24.12
If there is any transaction in any of the demat accounts of the investor or in any of his mutual fund folios, then CAS shall be sent to that investor through email on monthly basis. In case there is no transaction in any of the mutual fund and demat accounts then CAS with holding details shall be sent to the investors by email on half yearly basis. However, where an investor does not wish to receive CAS through email, option shall be given to the investor to receive the CAS in physical form at the address registered with the Depositories and the AMCs/MF-RTAs.
Para 1.8.5 (ii)
a. DP shall send at least one annual statement of holding through email in respect of accounts with no transaction and nil balance even after the account has remained in such state for one year. However, where an investor does not wish to receive the holding statement through email, option shall be given to the investor to receive the same in physical form at the registered address.
b. One annual statement of holding shall be sent in respect of remaining accounts through email unless specifically opted by the investor to receive the same in physical form.
Para 1.8.6
i. Accounts with zero balance and nil transactions during the year: DP shall send at least one annual statement of holding through email in respect of accounts with no transaction and nil balance even after the account has remained in such state for one year.
ii. Accounts which become zero balance during the year: For such accounts, no transaction statement may be sent for the duration when the balance remains nil. However, an annual statement of holding shall be sent to the BO through email.
iii. Accounts with credit balance: For accounts with credit balance but no transactions during the year, half yearly statement of holding for the year shall be sent to the BO through email.
In all above three scenarios, the BO shall be given the option to receive the statements in physical form.
Modifications to the Annexure 3 of the Master Circular on Depositories dated October 06, 2023 are as follows:
Para 14:
However, if the balance has become Nil during the year, the DP shall send one holding statement annually to such BOs through email and shall resume sending the transaction statement as and when there is a transaction in the account. In case of accounts with credit balance but no transactions during the year, half yearly statement of holding for the year shall be sent to the BO through email.
Para 15:
The DP shall provide the services of issuing the statement of demat accounts in an electronic mode. The DP will furnish to the BO the statement of demat accounts under its digital signature, as governed under the Information Technology Act, 2000. However, if the DP does not have the facility of providing the statement of demat account in the electronic mode, then the DP shall be obliged to forward the statement of demat accounts in physical form.
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