Compliance with deposit requirements is one of the conditions for registering as an IA or RA. This requirement must be met continuously to keep registrations valid.
Currently, they must comply with this requirement by June 30, 2025.
However, Sebi has received expressions from IAS and RAS, which faced practical issues regarding opening a time deposit account, highlighting the lien that marks the same in favor of administrators and supervisory bodies.
They cited difficulties such as inconsistent procedures between bank branches, delays in issuing required documents, confusion over SEBI lien mark rules, and limited awareness among bank staff. Therefore, in the consultation letter, Sebi proposed to accept marked liquid mutual fund units of liquid mutual funds as deposits for compliance with deposit requirements under IA and RA regulations. Sebi noted that liquid mutual funds are generally low risk and are easy to convert to cash.
We have suggested that these mutual fund units can be held in account statements (SOAs) or in Demat forms. The value of these mutual funds is counted into the deposit after subtracting the exit load and the specified haircut.
Values should be reviewed annually. If you are below the required threshold, or if you need more deposits for more clients, your IA or RA should be added and refilled.
India's Securities and Exchange Commission (SEBI) has been seeking public comment on the proposal until May 29th.
