The Securities and Exchange Board of India (“SEBI”), in exercise of powers issued under Regulation 8 of SEBI (Investment Advisers) Regulations, 2013, Regulation 8 of SEBI (Research Analysts) Regulations, 2014, Section 11(1) of the Securities and Exchange Board of India Act, 1992, vide Circular No. SEBI/HO/MIRSD/ MIRSD-PoD/P/CIR/2025/116,[1] dated August 12, 2025, amended the deposit compliance framework for Investment Advisers (“IAs”) and Research Analysts (“RAs”) (“Circular”). This Circular allows the use of liquid mutual funds and overnight mutual funds as an alternative to scheduled bank deposits for fulfilling the regulatory deposit requirement under Regulation 8 of the respective regulations. The Circular shall come into immediate effect from the date of issuance.
Key Highlights of the Circular:
- New Options for Regulatory Deposit: IAs and RAs may now maintain the required deposit in the form of:
- Units of liquid mutual funds; or
- Units of overnight mutual funds; or
- Scheduled bank deposits (as per earlier requirement).
- Lien Requirement: The chosen form of deposit (mutual fund units or bank deposit) must be marked as lien in favour of the:
- Investment Adviser Administration and Supervisory Body (IAASB) – for IAs; or
- Research Analyst Administration and Supervisory Body (RAASB) – for RAs.
- Administrative Implementation: IAs and RAs must comply with the revised deposit norms on or before September 30, 2025. BSE Limited, acting as the IAASB/ RAASB, has been directed to implement appropriate systems and communicate the changes to all registered IAs and RAs.
[1]https://www.sebi.gov.in/legal/circulars/aug-2025/use-of-liquid-mutual-funds-and-overnight-mutual-funds-for-compliance-with-deposit-requirement-by-investment-advisers-and-research-analysts_96052.html