SEBI Introduces GARUDA Mechanism for Faster Processing of AIF Placement Memoranda

Circular No. HO/19/19/11(2)2026-AFD-RAC2/I/17617/2026 dated July 30, 2026

Background

The Securities and Exchange Board of India (SEBI), with the objective of easing and expediting the launch of schemes/funds by Alternative Investment Funds (AIFs), has amended the SEBI (Alternative Investment Funds) Regulations, 2012 ("AIF Regulations") vide Gazette Notification No. CG-MH-E-14072026-274483 dated July 14, 2026. Pursuant to this amendment, SEBI has issued the captioned circular specifying the operational modalities under the newly introduced 'Green-Channel: AIF Rollout Upon Document Acknowledgement' (GARUDA) mechanism. The circular substitutes paragraphs 2.4 and 2.5, and inserts a new paragraph 2.7, in the SEBI Master Circular for AIFs dated June 3, 2026 ("the Master Circular").

Modalities for Filing of PPM and Launch of Regular Schemes

In terms of Regulation 12 of the AIF Regulations, AIFs may launch scheme(s) subject to filing of the Placement Memorandum (PPM) with SEBI through a SEBI-registered Merchant Banker. The revised paragraph 2.4 of the Master Circular specifies the following for Regular schemes:

Timeline for launch:

• AIFs may proceed with the launch of a new scheme after 10 working days from the date of filing the application with SEBI, unless otherwise advised.
• For the first scheme of an AIF, launch may proceed from the date of grant of SEBI registration, or after 10 working days of filing the application, whichever is later.

Filing requirements: The PPM of Regular schemes must be filed on the SEBI Intermediary Portal, at the time of registration or prior to launch of a new scheme, along with payment of the applicable scheme fee and the following documents:

Document	Requirement
Merchant Banker Due Diligence Certificate	As per format in Annexure 6
Fit and Proper declarations	With respect to the AIF, Sponsor and Manager, as specified under Schedule II of SEBI (Intermediaries) Regulations, 2008
Sponsor/Manager declarations	Confirming minimum continuing interest commitment in the AIF/scheme
PAN details	Of the AIF, its scheme (if available), Sponsor, Manager, Trustee, directors/partners of Sponsor, Manager and Trustee, and key investment team members, along with an Excel/Word/PDF file listing names and PANs

Role of the Merchant Banker: The Merchant Banker is required to independently exercise due diligence on all disclosures made in the PPM, satisfy itself as to the veracity and adequacy of such disclosures, and provide the due diligence certificate accordingly. Importantly, the Merchant Banker appointed for filing the PPM must not be an associate of the AIF, its Sponsor, Manager or Trustee.

Mandatory disclaimer clause: The details of the Merchant Banker must be disclosed in the PPM, and a specified disclaimer clause must be incorporated in the PPMs of all Regular schemes. This clause records that the Merchant Banker has independently exercised due diligence and certified that the disclosures are true, fair and adequate; that SEBI's acceptance of the filing does not amount to approval of the PPM or assumption of responsibility for the accuracy of disclosures; and that the Manager and Merchant Banker remain responsible for the accuracy and completeness of the PPM.

Accountability: The Merchant Banker and the Manager of the AIF are responsible for ensuring the accuracy and completeness of all disclosures made in the PPM and in declarations submitted by them. Any irregularity or lapse in the PPM renders the concerned entities liable for action.

Modalities for Filing of PPM and Launch of Schemes of AI Only Funds, LVFs and Angel Funds

The revised paragraph 2.5 of the Master Circular deals with schemes catering exclusively to Accredited Investors, in line with the framework for "Accredited Investors" introduced in the securities market.

AI Only Funds and Large Value Funds (LVFs): In terms of the proviso to Regulation 12(3A) of the AIF Regulations, AI only funds and LVFs (each investor investing not less than INR 25 crore) are exempt from filing their PPM with SEBI through a Merchant Banker and from incorporating SEBI's comments in the PPM. Such funds may launch their scheme immediately upon filing the PPM with SEBI. However, the first scheme of an AI only fund and/or LVF may be launched only from the date of grant of SEBI registration.

Angel Funds: Pursuant to the SEBI (Alternative Investment Funds) (Second Amendment) Regulations, 2026, Angel Funds are similarly exempt from filing their PPM through a Merchant Banker and from incorporating SEBI's comments in the PPM. Angel Funds may proceed with circulation of the PPM to investors for soliciting funds from the date of grant of SEBI registration.

Filing requirement: In addition to payment of the applicable scheme/registration fee, the PPM of AI only funds, LVFs and Angel Funds must be filed on the SEBI Intermediary Portal along with a duly signed and stamped undertaking, in the format specified at Annexure 7, by:

• the Chief Executive Officer of the Manager of the AIF (or a person holding an equivalent role, depending on the legal structure of the Manager), and
• the Compliance Officer of the Manager of the AIF.

Mandatory disclaimer clause: A corresponding disclaimer clause must be included in the PPMs of AI only funds, LVFs and Angel Funds, recording that the Manager has independently exercised due diligence, that the CEO and Compliance Officer have certified the disclosures as true, fair and adequate, that SEBI's acceptance of filing does not amount to approval, and that the Manager remains responsible for the accuracy and completeness of the PPM.

Accountability: The Manager of the AIF is responsible for ensuring the accuracy and completeness of all disclosures made in the PPM and declarations submitted. Any irregularity or lapse renders the concerned entities liable for action.

Naming convention:

• Any new scheme proposed to be launched as an AI only fund must carry the words 'AI only fund' or 'AIOF' at the end of the scheme name (for example, 'Xyz AI only fund' or 'Xyz AIOF').
• Any new scheme proposed to be launched as an LVF must carry the word 'LVF' at the end of the scheme name (for example, 'Abc LVF').

Explanation Inserted (New Paragraph 2.7)

For the purposes of paragraphs 2.4 to 2.6 of the Master Circular, the following definitions have been inserted:

• "Regular schemes" means schemes other than Large Value Fund for Accredited Investors (LVF), Accredited Investor Only Fund ('AI only fund') and Angel Funds.
• "Launch" of a scheme or fund means circulation of its Placement Memorandum to investors for soliciting funds.
• "Working days" means all days excluding Saturdays, Sundays, and public holidays on which the concerned SEBI office is closed for business, as published on the SEBI website.

Changes in Terms of PPM

Paragraph 21.4.4 of the Master Circular has been modified to provide that AI only funds, LVFs and Angel Funds are exempt from the requirement of intimating any changes in the terms of the PPM through a Merchant Banker. Such funds must directly file any changes in the terms of the PPM with SEBI, along with a duly signed and stamped undertaking by the CEO of the Manager (or equivalent) and the Compliance Officer of the Manager, in the format specified at Annexure 17.

Applicability and Legal Basis

This circular comes into force with immediate effect and applies to PPMs of all schemes/funds filed with SEBI from the date of notification of the SEBI (AIF) (Second Amendment) Regulations, 2026. It has been issued in exercise of powers conferred under Section 11(1) of the Securities and Exchange Board of India Act, 1992, read with Regulations 12, 19 and 36 of the AIF Regulations, to protect the interests of investors in securities and to promote the development of, and regulate, the securities market. The Master Circular for AIFs dated June 3, 2026 has been updated to reflect these changes and is available on the SEBI website.

Key Takeaways

• The GARUDA mechanism significantly compresses the time taken to launch AIF schemes, particularly benefiting AI only funds, LVFs and Angel Funds, which can now launch immediately upon PPM filing.
• The due diligence and accountability framework has been sharpened, with Merchant Bankers and Fund Managers bearing clearly defined responsibility for the accuracy of PPM disclosures.
• AIF sponsors and managers should review their scheme documentation and naming conventions to ensure alignment with the revised requirements, particularly the mandatory disclaimer clauses and the AIOF/LVF naming suffix requirements.

SEBI Informal Guidance on Applicability of Regulation 62A of LODR Regulations to Transfer of Unlisted Non-Convertible Debentures Pursuant to Business Transfer Agreement

Background

The Securities and Exchange Board of India ("SEBI"), vide its Informal Guidance dated July 20, 2026 (Issue No. I/16721/2026), addressed an application filed by Ananya Finance for Inclusive Growth Private Limited ("Ananya") under the SEBI (Informal Guidance) Scheme, 2025, seeking an interpretive letter on the applicability of Regulation 62A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("LODR Regulations") in a specific fact pattern involving intra-group transfer of unlisted debt securities.

Facts of the Case

Prayas Financial Services Private Limited ("Prayas"), a wholly owned subsidiary of Ananya, entered into a Business Transfer Agreement dated February 28, 2026 ("BTA"), pursuant to which its assets and liabilities — including unlisted, unsecured Non-Convertible Debentures ("NCDs") — were transferred to Ananya. Ananya is a listed entity with its debt securities listed on recognised stock exchanges.

The relevant facts placed before SEBI were as follows:

1. The unlisted NCDs of Prayas were originally issued on July 4, 2024, with allotment on July 12, 2024, and maturity on July 12, 2027.
2. Pursuant to the BTA, Ananya assumed the obligations under these NCDs, effectively consolidating the debt instruments within the listed entity.
3. The transferred NCDs continued as the same outstanding securities; no new debt securities were issued by Ananya in substitution.
4. No new debenture certificates, amended certificates, replacement debentures, or new ISINs were issued. The existing ISINs continued to remain with Prayas, unchanged.

Queries Raised

Ananya sought SEBI's guidance on two questions:

Query 1: Whether the transfer of unlisted non-convertible debt securities of a subsidiary, pursuant to a business transfer, mandatorily requires listing on a recognised stock exchange under Regulation 62A of the LODR Regulations, or whether such a transaction could instead be treated as a "transfer" rather than a "new issuance," thereby not necessitating a fresh listing application.

Query 2: In the event listing is found to be compulsory, whether SEBI could provide detailed guidance on the process and procedural requirements for effecting such listing.

SEBI's Guidance

On Query 1:

SEBI clarified that Regulation 62A(1) of the LODR Regulations requires a listed entity whose non-convertible debt securities are listed to list all non-convertible debt securities proposed to be issued on or after January 1, 2024, on the stock exchange(s). The provision is intended to ensure that unlisted non-convertible debt securities of listed debt entities, issued on or after this cut-off date, are brought within the regulatory framework and made subject to applicable disclosure and investor protection norms.

Significantly, SEBI held that the applicability of Regulation 62A cannot be determined solely on the basis of the structure of a transaction. Where a corporate restructuring — including a transfer of business from one entity to another — results in the liability associated with outstanding unlisted non-convertible debt securities effectively becoming an obligation of a listed entity, Regulation 62A is attracted regardless of whether the transaction is characterised as a "transfer" as opposed to a fresh "issuance."

Accordingly, SEBI clarified that where a debt-listed entity assumes and continues the obligations in respect of outstanding unlisted non-convertible debt securities issued on or after January 1, 2024, the requirements of Regulation 62A must be complied with holistically by such entity.

On Query 2:

SEBI stated that operational requirements for ensuring compliance with listing requirements — including consequential matters relating to ISINs, depository records, and listing formalities — are governed by the applicable framework prescribed by the recognised stock exchange(s) and depository(ies). The applicant was accordingly directed to ensure compliance with such operational requirements as may be applicable.

Key Takeaways

1. Substance over form: SEBI has reaffirmed that the classification of a transaction as a "transfer" rather than an "issuance" does not, by itself, exclude the applicability of Regulation 62A. The determinative factor is whether a listed entity has assumed the underlying obligation on outstanding unlisted debt securities issued on or after January 1, 2024.

2. Corporate restructuring implications: Business transfer agreements, slump sales, and similar restructuring arrangements involving the movement of unlisted debt liabilities into a listed entity must be evaluated for Regulation 62A compliance at the stage of structuring, not merely at the stage of fresh issuance.

3. No exemption merely on absence of new instruments: The fact that no new debenture certificates, ISINs, or replacement instruments were issued did not, in SEBI's view, take the transaction outside the scope of Regulation 62A, since the obligation itself had shifted to a listed entity.

4. Limited scope of the guidance: As is standard under the Informal Guidance Scheme, SEBI clarified that this letter reflects the relevant department's position on enforcement action only, is based on the specific representations made in the application, does not bind the Board, and does not affect the applicability of any other SEBI regulation or law administered by any other authority.

Conclusion

This Informal Guidance is a useful reference point for listed entities undertaking group-level restructuring involving unlisted debt securities, particularly through business transfer or similar arrangements. It signals that SEBI will look through the transactional form to the substance of obligation assumption when determining Regulation 62A applicability, and that professionals advising on such restructurings should factor in listing compliance at the transaction-structuring stage itself.

RBI Issues Second Amendment to Income Recognition, Asset Classification and Provisioning Directions for Small Finance Banks, 2026

Introduction

The Reserve Bank of India has notified the Reserve Bank of India (Small Finance Banks – Income Recognition, Asset Classification and Provisioning) Second Amendment Directions, 2026 vide circular RBI/2026-27/196, DOR.STR.REC.161/21-04-048/2026-27, dated July 16, 2026. The amendment introduces a new framework for income recognition in respect of Specified Non-Financial Assets (SNFA) acquired by Small Finance Banks.

Background

The amendment has been issued consequent to the Reserve Bank of India (Small Finance Banks – Resolution of Stressed Assets) Second Amendment Directions, 2026, also dated July 16, 2026. In exercise of the powers conferred by Sections 21 and 35A of the Banking Regulation Act, 1949, and all other enabling laws, the Reserve Bank, being satisfied that it is necessary and expedient in the public interest to do so, has issued these Amendment Directions.

Key Amendment

A new provision, "E1. Income Recognition in case of acquisition of Specified Non-Financial Assets (SNFA)," has been inserted in Chapter V – Income Recognition of the principal Directions, comprising two new paragraphs:

Paragraph 133C

Any accrued but unrealised interest and/or charges from the extinguished exposure, pertaining to periods prior to acquisition of a Specified Non-Financial Asset, shall not be recognised as income upon acquisition of the SNFA. Where such income has been recognised in respect of any SNFA outstanding in the books of a bank as on September 30, 2026, it shall be reversed through the Profit and Loss account, latest by September 30, 2027, to the extent it remains unrealised as on that date.

Paragraph 133D

Any income received from an SNFA shall be recognised in the income statement as "non-interest / other income," in the financial year in which it is realised. Similarly, any expense incurred towards upkeep of an SNFA shall be accounted for in the income statement in the financial year in which it is incurred.

Effective Date

The amendment shall come into force with effect from October 1, 2026.

Analysis

The amendment addresses a specific accounting concern arising in the context of stressed asset resolution, where a Small Finance Bank acquires a non-financial asset in extinguishment of a loan exposure. Under the revised framework:

Aspect	Treatment
Unrealised interest/charges accrued prior to SNFA acquisition	Not to be recognised as income on acquisition
Previously recognised such income (on SNFAs outstanding as on September 30, 2026)	To be reversed through P&L, latest by September 30, 2027, to the extent unrealised
Income realised from SNFA post-acquisition	Recognised as non-interest/other income in the year of realisation
Expenses on upkeep of SNFA	Recognised in the year incurred

The effect of this framework is to delink income recognition from the accrual basis in respect of stale, unrealised amounts carried over from an extinguished exposure, and to align recognition strictly with actual realisation. This is consistent with the broader prudential objective of ensuring that reported income of Small Finance Banks reflects genuine cash-backed realisation rather than notional or unrealised accruals inherited through asset acquisition in stressed asset resolution.

Conclusion

Small Finance Banks engaging in resolution of stressed assets through acquisition of non-financial assets should review their income recognition policies to ensure compliance with the newly inserted paragraphs 133C and 133D with effect from October 1, 2026. Banks carrying unrealised income recognised in respect of SNFAs outstanding as on September 30, 2026 should specifically account for the mandated reversal by September 30, 2027.

SEBI Simplifies and Standardises the Framework for Transmission of Securities

 Introduction

The Securities and Exchange Board of India (SEBI), vide circular no. HO/38/13/11(14)2026-MIRSD-POD/I/17111/2026 dated July 23, 2026, has notified a revised and standardised framework for transmission of securities and mutual fund units consequent to the demise of a sole holder or all joint holders. The circular has been issued in exercise of powers under Section 11(1) of the SEBI Act, 1992, read with Section 19 of the Depositories Act, 1996, and pursuant to amendments to Regulation 40(7) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, notified vide Gazette Notification No. SEBI/LAD-NRO/GN/2026/312 dated July 10, 2026.

This move is part of SEBI's continuing "Ease of Doing Investment and Ease of Doing Business" initiative and is aimed at making the transmission process more efficient, harmonised, and investor-friendly across listed companies, Registrars and Share Transfer Agents (RTAs), Depositories, Depository Participants (DPs), and Asset Management Companies (AMCs).

Applicability

The revised framework applies to the transmission of listed securities and units issued by AMCs upon the demise of the sole holder or all joint holders. It does not apply in cases involving disputes or contesting/competing claims among heirs — such matters continue to require resolution through appropriate judicial or legal proceedings. All processing entities — listed companies, RTAs, Depositories, DPs, and AMCs — are required to adhere uniformly to the prescribed procedure and documentation.

Introduction of Quick Transmission Processing (QTP)

A new category, Quick Transmission Processing (QTP), has been introduced for low-value claims by immediate relatives of the deceased holder — namely parents, spouse, children, and parents-in-law. The revised claim thresholds are as follows:

Type of Holding	QTP Threshold	Simplified Documentation Threshold
Securities in physical mode	₹10,000	₹10 lakh*
Securities in dematerialised mode	₹30,000	₹30 lakh

*Listed entities may, at their discretion, enhance this threshold for physical securities.

The value of securities is to be quantified based on the previous closing price at a recognised stock exchange, or the last available NAV in the case of AMC units.

Key Documentation Simplifications

The circular introduces several notable relaxations to existing documentation requirements:

• Removal of mandatory Probate of Will, in line with recent amendments to succession laws.
• Combined Affidavit-cum-NOC, replacing the earlier requirement of separate affidavit and No Objection Certificate documents.
• Acceptance of death certificates bearing QR codes, in addition to original or attested copies, to facilitate easier verification.
• Expanded verification modes for death certificates issued outside India, including consularisation by Indian Embassies/Consulates, apostille, and certification by authorised officials of overseas branches of Indian banks or correspondent foreign banks.

Documentation Requirements by Category

Where a Nomination Exists

Nominees are required to submit a Transmission Request Form (Annexure-3), latest Client Master List (CML), verifiable death certificate, and original security certificate or Statement of Account (SOA), as applicable. Nominees receive the assets as trustees on behalf of the legal heirs of the deceased holder, and the regulated entity stands fully discharged from liability upon such transmission.

Where There Is No Nomination

In the absence of a nomination, transmission is made in favour of the claimant(s)/legal heir(s), with documentation requirements structured across three tiers:

1. QTP claims: Transmission Request Form-cum-Undertaking on plain paper (Annexure-2), along with proof establishing the relationship between the claimant and the deceased holder.
2. Simplified documentation category: Notarised indemnity bond (Annexure-4) and notarised Affidavit-cum-NOC from all legal heirs (Annexure-5), or alternatively, a copy of a family settlement deed duly attested/approved.
3. Claims above the simplified documentation threshold: Affidavit-cum-NOC from all legal heirs, together with any one of — a copy of the Will with a notarised indemnity bond, a Legal Heirship Certificate (issued by a revenue authority not below the rank of Tehsildar) with a notarised indemnity bond, or a Succession Certificate/Letter of Administration/Court Decree.

Where the claimant furnishes court-issued documents such as a Succession Certificate, Probate of Will, Letter of Administration, or Court Decree, the requirement for a notarised indemnity bond and Affidavit-cum-NOC from non-claimant legal heirs stands waived.

Standard Procedure for Claim Processing

Processing entities are required to use standardised forms — the Transmission Request Form-cum-Undertaking (QTP), Transmission Request Form (non-QTP), Notarised Indemnity Bond, and Notarised Affidavit-cum-NOC — made available both in physical form and on their websites, along with the applicable document checklists.

Entities must acknowledge receipt of claims and simultaneously flag any pending, missing, incomplete, or incorrect documentation. Where physical securities are involved, the processing entity is required to initiate demat conversion directly into the claimant's demat account following verification, with the RTA retaining and defacing the physical certificate as per existing procedure.

Any deviation from the prescribed procedure, or exercise of discretion to seek additional documents (permissible only for claims above the simplified documentation threshold), must be communicated to the claimant in writing with reasons recorded.

Timelines for Settlement

Processing entities are required to settle transmission claims within 21 calendar days from the date of receipt of all required documents. Where a claim is not settled within this timeline or is rejected, the entity must communicate the reasons for delay or rejection to the claimant in writing. Delays attributable to the entity may invite appropriate regulatory action by SEBI.

Rule of Survivorship

For transmission to surviving joint holders, RTAs, listed entities, AMCs, DPs, and Depositories continue to be governed by Clause 23 of Table F, Schedule I, read with Section 56(2) and 56(4)(c) of the Companies Act, 2013, subject to the Articles of Association of the company. Notably, in survivorship cases, entities are barred from seeking any documentation — including KYC, indemnities, or undertakings — from the surviving joint holder, other than a copy of the deceased holder's death certificate.

Reporting Requirements

Processing entities are required to submit monthly reports to SEBI (at rta@sebi.gov.in) for a period of six months, capturing category-wise data on cases pending, received, approved, rejected, and cases where additional documents were sought, along with reasons.

Effective Date

The revised framework, along with the model forms prescribed in the Annexures, comes into force 30 days from the date of issuance of the circular — that is, on or around August 22, 2026. Processing entities have nevertheless been directed to extend the benefit of the simplified procedure to transmission requests received even before this date, without requiring re-submission of documents already furnished in the earlier format.

Conclusion

This circular represents a meaningful simplification of an area that has historically been a significant pain point for legal heirs and nominees navigating the transmission process during an already difficult period. By harmonising documentation across processing entities, introducing a dedicated low-value claim category, and imposing firm processing timelines, SEBI has sought to reduce both procedural friction and inconsistency in implementation across the securities market ecosystem. Listed companies, RTAs, Depositories, DPs, and AMCs would do well to update their internal SOPs and claimant-facing documentation well ahead of the effective date.

SEBI Notifies Sweeping Amendments to Employees' Service Regulations, 2026

The Securities and Exchange Board of India (SEBI) has notified the Securities and Exchange Board of India (Employees' Service) (Amendment) Regulations, 2026, vide notification no. SEBI/LAD-NRO/GN/2026/311 dated July 7, 2026, effective from the date of publication in the Official Gazette.

The amendment substantially overhauls the conflict-of-interest, investment, and disclosure framework applicable to SEBI's own workforce, building on the Securities and Exchange Board of India (Employees' Service) Regulations, 2001, which were last amended on September 8, 2025.

Revised and New Definitions (Regulation 3(1))

The amendment recasts several foundational definitions:

• "Dependent" now distinguishes between "dependent children" (eligible for medical/LFC benefits) and "substantially dependent" persons (included in the Group Mediclaim Policy), while expressly excluding non-dependents added to the policy on a self-funded premium basis.
• "Family members" is redefined to cover the spouse, dependent children (including step and adopted children), persons under the employee's legal guardianship who are substantially dependent, and any blood or marriage relation who is substantially dependent.
• New terms introduced include "Financial investment," "Non-permitted Investment," "Permitted investment," "Professional interest," "Relational interest," and "Relative" (aligned with Section 2(77) of the Companies Act, 2013), along with "OEC" (Office of Ethics and Compliance).

Notably, "Non-permitted Investment" covers equity, equity-convertible instruments, and equity/commodity derivatives, but expressly excludes investments through professionally managed pooled investment vehicles regulated by a financial sector regulator, and investments in InVIT/REIT units.

Post-Employment and Future Employment Disclosures (Regulations 54 and 55)

Employees must now disclose any negotiation or agreement for future employment within one month from the end of the month in which it occurs (new Regulation 54(2)). Separately, a new Regulation 55(6) bars an employee who leaves service — whether by retirement, resignation, or otherwise — from appearing before or against the Board on behalf of any other person in any matter, quasi-judicial proceeding, adjudication, settlement, or approval matter for two years from the date of relief.

Revised Gift Thresholds (Regulation 62)

The definition of "trivial gifts" is broadened to expressly include mementos, souvenirs, and bouquets, and the restriction confining trivial gifts to "the occasion of Diwali and New Year" is removed, extending the exemption year-round. The word "near" is deleted from the Explanation, widening its scope. The monetary threshold for permissible gifts is raised from Rs. 10,000 to Rs. 50,000, calculated per person from whom gifts are received.

Restrictions on Investments (Regulation 64, substituted)

The substituted Regulation 64 prohibits employees and their family members from making fresh non-permitted investments during the employee's period of service. Additionally, investment in any single SEBI-regulated entity's pooled investment vehicle products is capped at 25% of the employee's total acquisition cost of financial investments as on the last day of the preceding financial year, or the date of joining, whichever is later.

Relaxations for Family Investments (New Regulation 64A)

The restriction under Regulation 64(1) does not apply where a spouse acquires equity through an ESOP that forms part of their own pay package, including its subsequent disposal; inadvertent technical violations arising from such actions are not treated as misconduct affecting the employee's career, though monetary penalties may still apply in appropriate cases. The restriction is also relaxed where family members use discretionary portfolio management services (with independent fund manager control) or acquire/dispose of unlisted securities as part of their own private business or investment activity, including post-listing scenarios.

Transitional Options for Existing Non-Permitted Investments (New Regulation 64B)

At the time of joining, an employee holding non-permitted investments may choose to: liquidate them; freeze them until completion of service; disclose a trading plan to the OEC under Regulation 5 of the SEBI (Prohibition of Insider Trading) Regulations, 2015; or sell them with prior OEC approval absent a trading plan. Equity or convertible instruments in a commercial venture (including unlisted companies) permit only the liquidate or freeze options. Unliquidated holdings carry no voting rights during service, though corporate action receipts and rights issue subscriptions remain unaffected. Vested options must be exercised before joining, not during service. Employees in service at the time this amendment takes effect must exercise these options within a timeline to be specified, and family members may continue to hold or dispose of pre-existing non-permitted investments throughout the employee's service.

Expanded Disclosure Obligations (Regulation 66, substituted)

Employees must disclose, in a format determined by the competent authority: details of family members and relatives; professional interests over the preceding three years; immovable properties (held by the employee or family, acquired from the employee's funds or in which the employee has an interest); financial investments and liabilities similarly sourced; non-permitted investments held by family members beyond those funded by the employee; and any property rental contracts. These disclosures are due at joining and at exit, with updates required within one month of the end of the month in which changes occur (new family members, relatives, property transactions). Transactions in financial assets exceeding twice the employee's monthly basic pay must be disclosed within the same one-month timeline. Annual disclosures as on the last day of the preceding financial year are also mandated. For Grade F employees and Executive Directors, immovable property disclosures will be made public by the OEC in a manner to be prescribed.

Recusal Framework (New Regulation 66A)

A new recusal mechanism requires employees to withdraw from matters involving a "conflicted relationship" — defined to cover matters involving family members or relatives in key managerial/senior management positions at the concerned entity, professional or relational interests likely to cause bias, close friends or associates within the last three years, material investment interest (non-permitted investment exceeding Rs. 20 lakh or 5% of total financial investment acquisition cost), or investments exceeding the 25% pooled-vehicle threshold under Regulation 64(2). Recusal entails absence from discussion or decision-making, no access to related information, and non-participation in deliberations. Matters involving a class of entities or generic regulation-making fall outside this scope. A digital system will be established to record disclosures of conflicted relationships and process recusals, and employees must disclose such conflicts at the earliest opportunity.

Conclusion

These amendments materially raise the compliance bar for SEBI's own personnel, introducing a structured investment-restriction regime, an expanded and time-bound disclosure architecture, and a formal recusal mechanism backed by digital tracking. Entities and professionals interacting with SEBI officials — particularly on matters involving related persons or ongoing engagements — should note the two-year post-exit representation bar under Regulation 55(6), as it may affect engagement of former SEBI personnel in advisory or representational capacities.

SEBI Eases Certification Requirements for Distribution of Specialized Investment Funds (SIFs)

 Circular Reference: HO/24/13/17(1)2026-IMD-POD-1/I/16895/2026 | Date: July 21, 2026

Background

The Securities and Exchange Board of India (SEBI), vide Circular No. SEBI/HO/IMD/IMD-I POD-1/P/CIR/2025/26 dated February 27, 2025, had introduced the regulatory framework governing Specialized Investment Funds (SIFs). These provisions were subsequently consolidated under Chapter 21 of the SEBI Master Circular for Mutual Funds dated March 20, 2026 ("MF Master Circular").

Paragraph 21.10 of the MF Master Circular laid down the certification requirements applicable to entities engaged in the sale and/or distribution of SIF products. Pursuant to representations received from industry participants, and following consultations with the National Institute of Securities Markets (NISM), SEBI has now reviewed and revised these certification norms.

Revised Certification Framework under Paragraph 21.10

1. Unified Certification for MF and SIF Distribution

Persons employed or engaged (or proposed to be employed or engaged) in the sale and/or distribution of SIF products are now required to hold a valid NISM Series-V-D – Mutual Fund - Specialized Investment Fund Distributors Certification. Notably, entities holding this certification are eligible to distribute both Mutual Fund and SIF products, without the need to separately hold the NISM Series V-A – Mutual Fund Distributors Certification.

2. Continuation of NISM Series V-A for MF-only Distributors

Entities engaged solely in the distribution of Mutual Fund products (and not SIF products) shall continue to comply with the existing NISM Series V-A certification requirement, as prescribed under Gazette Notification No. LAD-NRO/GN/2010-11/09/6422 dated May 31, 2010.

3. Discontinuation of NISM Series XIII Requirement

The existing requirement to hold the NISM Series XIII – Common Derivatives Certification for SIF distribution shall cease to apply with effect from September 21, 2026.

4. Transition Arrangement

To facilitate a smooth migration to the new framework, distributors who hold a valid NISM Series XIII certification obtained on or before September 21, 2026 are exempted from obtaining the NISM Series-V-D certification until the expiry of their existing NISM Series XIII certification. However, during this transition period, such distributors must continue to hold a valid NISM Series V-A certification, in line with the erstwhile framework.

5. Compliance Oversight

AMFI and Asset Management Companies (AMCs) have been entrusted with the responsibility of ensuring compliance with the revised certification requirements by distributors and agents.

Effective Date and Applicability

The circular clarifies that all other provisions of the SEBI Master Circular for Mutual Funds dated March 20, 2026 remain unchanged, and the revised provisions come into force with immediate effect.

Regulatory Basis

The circular has been issued in exercise of powers conferred under Section 11(1) of the Securities and Exchange Board of India Act, 1992, read with Regulation 84 of the SEBI (Mutual Funds) Regulations, 2026, and Regulation 3(1) of the SEBI (Certification of Associated Persons in the Securities Markets) Regulations, 2007.

Key Takeaway

Category	Certification Requirement
MF + SIF distribution	NISM Series-V-D only
MF-only distribution	NISM Series V-A
SIF distribution (transition)	NISM Series XIII valid till expiry (obtained on/before Sep 21, 2026) + NISM Series V-A
SIF distribution (post Sep 21, 2026, new entrants)	NISM Series-V-D

This move effectively simplifies what was previously a dual-certification requirement (NISM V-A plus NISM Series XIII) into a single, purpose-built certification track for entities engaged in SIF distribution, while preserving compliance continuity for existing certificate holders during the transition window.

SEBI Overhauls Employee Conduct Framework: Employees' Service (Amendment) Regulations, 2026

 Notification No. SEBI/LAD-NRO/GN/2026/311 | Dated: July 7, 2026

Introduction

The Securities and Exchange Board of India has notified the SEBI (Employees' Service) (Amendment) Regulations, 2026, introducing a comprehensive overhaul of the conflict-of-interest, investment restriction, and disclosure framework applicable to its own employees. Issued in exercise of powers under Section 30 of the SEBI Act, 1992, these amendments to the SEBI (Employees' Service) Regulations, 2001 came into force upon publication in the Official Gazette and represent the most significant revision to the regime since the last amendment on September 8, 2025.

The amendments respond to the practical need for a more nuanced, workable framework governing employee investments, family member disclosures, and recusal from conflicted matters — an area that had previously created ambiguity in application.

Revised Definitions (Regulation 3(1))

The amendment substitutes and expands several foundational definitions:

Term	Key Change
Dependent	Split into "Dependent children" and "Substantially dependent" persons; excludes those added to the Group Mediclaim Policy as non-dependents with separately borne premiums
Family members	Now includes spouse, dependent children (including step/adopted), legal wards substantially dependent on the employee, and blood/marriage relatives who are substantially dependent
Financial investment	New — investment or deposit in any financial assets
Non-permitted investment	New — equity, equity-convertible instruments, and equity/commodity derivatives, excluding professionally managed pooled vehicles and InVIT/REIT units
Permitted investment	New — any financial investment that is not a non-permitted investment
Professional interest	New — interest from employment/advisory engagement with a non-government entity in the preceding three years
Relational interest	New — interest arising from association as a family member or relative
Relative	New — as defined under Section 2(77) of the Companies Act, 2013
OEC	New — Office of Ethics and Compliance within SEBI

Restrictions on Investments (Regulation 64)

Regulation 64 has been substituted in its entirety:

• Employees and their family members are barred from making fresh non-permitted investments during the employee's period of service.
• Investment in products of any single SEBI-regulated entity managing a pooled investment vehicle is capped at 25% of the employee's total acquisition cost of all financial investments held as on the last day of the previous financial year (or date of joining, whichever is later).

Relaxations for Family Investments (New Regulation 64A)

To address practical hardship, the amendment carves out specific relaxations:

• Spousal acquisition (and disposal) of equity under an Employee Stock Option Plan forming part of the spouse's own compensation package is exempt. Technical violations arising from such actions will not be treated as employee misconduct affecting career progression, though monetary penalties may still be imposed in appropriate cases.
• Family members using discretionary portfolio management services (where the fund manager acts independently) are exempt from the restriction.
• Acquisition or disposal of unlisted securities as part of a family member's private business or investment activity is exempt, and this exemption continues even after such securities are subsequently listed.

Transitional Options for Existing Investments (New Regulation 64B)

Employees holding non-permitted investments at the time of joining may elect one of the following:

1. Liquidate the investment;
2. Freeze it until completion of service;
3. Disclose a trading plan to the OEC for sale during service, in accordance with Regulation 5 of the SEBI (Prohibition of Insider Trading) Regulations, 2015; or
4. Sell without a trading plan, subject to prior OEC approval.

Where the investment relates to equity (or convertible instruments) of a commercial venture, including unlisted companies, only options (1) and (2) are available. Voting rights on unliquidated non-permitted equity remain suspended throughout the service period, though corporate action entitlements and rights issue subscriptions are not prohibited. Family members may continue to hold or dispose of pre-existing non-permitted investments without restriction. Serving employees at the time this amendment takes effect must exercise their chosen option within a timeline to be separately specified.

Disclosure of Interests (Regulation 66 — Substituted)

The revised Regulation 66 mandates disclosure of:

• Family members and relatives;
• Professional interests over the preceding three years;
• Immovable property held by the employee or family, where funded by or connected to the employee;
• Financial investments and liabilities of the employee or family, similarly connected;
• Non-permitted investments held by family members, including those not funded by the employee; and
• Rental contracts on immovable property.

Disclosures are required at joining and exit, with annual filings as on the last day of the preceding financial year. Any change in family members, relatives, rental arrangements, or immovable property transactions must be disclosed within one month of the month-end in which the change occurs. Financial asset transactions exceeding twice the employee's monthly basic pay must similarly be disclosed within one month of month-end. Notably, immovable property disclosures of employees in Grade F and Executive Directors will be made public by the OEC.

Recusal Framework (New Regulation 66A)

A structured recusal mechanism has been introduced, requiring an employee to withdraw entirely — including from discussion, decision-making, and access to related information — from any matter falling within a "conflicted relationship." This includes matters involving:

• Family members or relatives employed in key managerial or senior management positions with the concerned entity;
• Professional or relational interests likely to give rise to bias or perceived bias;
• Close friends or associates of the preceding three years, similarly likely to give rise to bias;
• Material interest, defined as non-permitted investment (by the employee and family combined) exceeding ₹20 lakh in acquisition cost, or exceeding 5% of total financial investments held; and
• Investments exceeding the 25% pooled-vehicle threshold under Regulation 64(2), until the holding falls below that threshold.

Matters involving a class of entities or generic rule-making are expressly excluded from the scope of conflicted relationships. Doubtful cases may be referred to the OEC. A digital system is to be established to record disclosures and process recusals.

Post-Employment Restrictions (Regulation 55(6))

A new cooling-off provision bars employees who leave service — whether by retirement, resignation, or otherwise — from appearing before or against the Board, on behalf of any other person, in any matter, quasi-judicial proceeding, adjudication, settlement, or approval matter, for a period of two years from the date of relief from service.

Gift Regulations (Regulation 62)

• Trivial gifts now expressly include mementos, souvenirs, and bouquets, in addition to existing categories.
• The occasion-based reference to Diwali and New Year has been removed, broadening applicability.
• The monetary threshold for permissible gifts has been raised from ₹10,000 to ₹50,000, now explicitly applied per donor rather than in aggregate.

Conclusion

These amendments reflect SEBI's effort to bring greater precision and workability to its internal governance regime, particularly around family member investments — an area that earlier lacked adequate carve-outs for legitimate financial planning. At the same time, the regulator has strengthened accountability through mandatory recusal protocols, expanded disclosure obligations, and a post-exit cooling-off period, aligning employee conduct standards with the fiduciary expectations SEBI places on the entities it regulates.

Reference: Securities and Exchange Board of India (Employees' Service) (Amendment) Regulations, 2026, Notification No. SEBI/LAD-NRO/GN/2026/311, dated July 7, 2026.

SEBI Streamlines Mutual Fund Transmission Process for Ease of Claim by Legal Heirs

 Reference: SEBI PR No. 41/2026 | Dated: July 17, 2026

Background

The Securities and Exchange Board of India (SEBI), as part of its ongoing investor-friendly initiatives, has advised the Association of Mutual Funds in India (AMFI) to further simplify the standards governing the "Procedure to Claim Units/Proceeds upon Death of a Unit Holder." This measure is intended to address operational challenges frequently encountered by legal heirs and kin of deceased investors during the mutual fund transmission process. AMFI has accordingly amended the relevant standards.

Objective

The revised standards aim to facilitate ease of transmission while aligning industry practices with SEBI's broader regulatory objective of safeguarding investor interests, particularly for the families of deceased unit holders navigating claim procedures during an already difficult time.

Key Investor-Friendly Measures

The updated standards on "Procedure to Claim Units/Proceeds upon Death of a Unit Holder" incorporate the following changes:

1. Resolution of Address Mismatches

In cases where a mismatch arises between the recorded address of the deceased unit holder and current documentation, Asset Management Companies (AMCs) are now permitted to rely on the latest available address details, provided such details are supported by relevant documentary evidence.

2. Harmonized Name/Signature Mismatch Framework

To address discrepancies in the name or signature of the unit holder, AMCs may adopt a framework aligned with guidelines already prescribed for Registrars and Transfer Agents (RTAs) under the SEBI Master Circular dated February 6, 2026. Key provisions include:

Type of Mismatch	Prescribed Resolution
Name mismatch	Investor may submit self-certified documents such as Aadhaar, Passport, etc.
Signature mismatch	RTAs may follow appropriate procedures based on the nature of the mismatch

For further procedural detail, reference may be made to Annexure-10 of the SEBI Master Circular for Registrars to an Issue and Share Transfer Agents dated February 6, 2026.

3. AMFI-Led Training

AMFI has been directed to conduct training for all relevant entities involved in the transmission process, ensuring that practices across AMCs remain aligned with the updated regulatory guidelines.

Conclusion

This streamlining initiative reflects SEBI's continued commitment to reducing procedural friction for investors and their families, particularly during transmission events. Legal heirs and nominees dealing with mutual fund transmission claims stand to benefit from simplified documentation requirements and greater consistency across AMCs.

---

Source: SEBI Press Release PR No. 41/2026, dated July 17, 2026

---

SEBI Permits Intraday Borrowing Facility for Mutual Funds

Background

The Securities and Exchange Board of India (SEBI), vide Circular No. HO/(92)2026-IMD-POD-2/I/16006/2026 dated July 10, 2026, has introduced a framework permitting mutual funds to avail intraday borrowing facilities. This move follows the amendment to the SEBI (Mutual Funds) Regulations, 2026, carried out through Gazette Notification No. CG-MH-E-07072026-274229 dated July 3, 2026, aimed at addressing liquidity mismatches arising from differences in market settlement timings.

This circular supersedes the guidelines on borrowings of mutual funds specified in clause 5.9.1 of the SEBI Master Circular for Mutual Funds dated March 20, 2026, and SEBI Circular No. HO/(92)2026-IMD-POD-2/I/7885/2026 dated March 25, 2026.

Permitted Purposes for Intraday Borrowing

Mutual funds may avail intraday borrowings for the following purposes:

S. No.	Purpose
1	All unitholder pay-outs such as redemptions, IDCW pay-outs, interest, etc.
2	Pay-in with respect to investments made by the scheme
3	MTM obligations and foreign exchange settlements
4	Repayment of existing borrowings

Quantum Restrictions

The quantum of intraday borrowings is capped with reference to specific categories of receivables:

S. No.	Category	Description
1	Guaranteed receivables	Inflows from RBI, Clearing Corporations, subscription inflows received in scheme bank accounts, etc.
2	Non-guaranteed receivables	Inflows sighted during the day such as maturity proceeds and/or secondary market settlement from NCDs, CP, CDs, OTC Swaps, etc., to be received by the scheme by end of day
3	Additional borrowing	May be availed by AMCs solely for meeting redemption and other pay-outs to unitholders, as specified under Regulation 42(1) of the SEBI (Mutual Funds) Regulations, 2026

Compliance Obligations for AMCs

Asset Management Companies are required to comply with the following conditions:

1. Repayment discipline: Intraday borrowings must be repaid by end of the day; any conversion into overnight borrowings must remain within regulatory limits and be restricted to purposes permitted under Regulation 42(1).

2. Board-approved policy: The Boards of the AMC and Trustees must approve a policy governing the use of the intraday borrowing facility. This policy must be published on the AMC's website and must, inter-alia, cover approval processes and monitoring mechanisms.

3. Record maintenance: AMCs must maintain scheme-wise records detailing the underlying liquidity mismatch and the expected source of repayment for each instance of intraday borrowing.

4. Regulatory cross-compliance: AMCs must ensure compliance with clauses 6 and 7 of the Fourth Schedule to the SEBI (Mutual Funds) Regulations, 2026, and para 17.7 of the Master Circular.

5. Cost allocation: In line with para 11.10 of the Master Circular, the cost of intraday borrowing, if any, shall be borne by the AMC. Any loss or cost arising from unforeseen events or delays in receipt of funds from the receivables listed above shall also be borne by the AMC.

Effective Date

This circular comes into effect from September 1, 2026.

Regulatory Basis

The circular has been issued in exercise of powers conferred under Section 11(1) of the SEBI Act, 1992, read with Regulation 42(2) and Regulation 84 of the SEBI (Mutual Funds) Regulations, 2026, with the objective of protecting investor interests and promoting the orderly development and regulation of the securities market.

Conclusion

This amendment gives AMCs a formal, regulated mechanism to manage short-term liquidity mismatches without resorting to ad hoc arrangements. AMCs should use the runway before the September 1, 2026 effective date to get Board and Trustee approval of the intraday borrowing policy, put monitoring and record-keeping systems in place, and ensure the policy is published on their website well ahead of the deadline.

RBI Issues Second Amendment to NBFC (Credit Facilities) Directions, 2026

           Introduction

The Reserve Bank of India, vide notification RBI/2026-27/183 dated July 15, 2026, has issued the Reserve Bank of India (Non-Banking Financial Companies – Credit Facilities) Second Amendment Directions, 2026. These amendments modify the Reserve Bank of India (Non-Banking Financial Companies – Credit Facilities) Directions, 2025, by inserting two Explanations addressing project financing structures and right of way requirements in the power sector.

Statutory Basis

The Amendment Directions have been issued in exercise of powers conferred under:

Statute	Relevant Provisions
Reserve Bank of India Act, 1934	Sections 45JA, 45L, 45M
National Housing Bank Act, 1987	Sections 30A, 32
Factoring Regulation Act, 2011	Section 3 read with Sections 31A and 6

Key Amendments

1. Explanation to Paragraph 70 — Financing of Independent Project Units

An Explanation has been inserted in paragraph 70 clarifying that where a project is capable of being operationalised as multiple independent viable units, an NBFC may, at its discretion, finance such units as separate projects, each with its own financial closure. This flexibility is subject to the condition that each independent unit is appraised ex-ante for standalone viability.

This amendment provides NBFCs greater structural flexibility in project appraisal and financing, particularly for large infrastructure projects that are capable of phased or modular execution, rather than requiring the project to be financed and appraised as a single composite unit.

2. Explanation to Paragraph 72 — Right of Way for Power Generation-cum-Transmission Projects

An Explanation has been inserted in paragraph 72 clarifying that for projects in electricity generation where the project scope also involves transmission (evacuation infrastructure), the right of way requirement for the transmission component may be determined in accordance with sub-paragraph (3) of paragraph 72.

This clarification addresses the specific circumstance of composite generation-cum-transmission projects, aligning the right of way norm applicable to the evacuation infrastructure with the framework already prescribed under sub-paragraph (3).

Effective Date

The amendments come into force with immediate effect, i.e., from July 15, 2026.

Implications for NBFCs

NBFCs engaged in project finance, particularly in the infrastructure and power sectors, should review their internal appraisal and financial closure frameworks to align with the flexibility now permitted under paragraph 70, and should factor the clarified right of way treatment under paragraph 72 into due diligence for generation-cum-transmission projects.

SEBI Notifies Second Amendment Regulations, 2026 to LODR and AIF Frameworks

Introduction

The Securities and Exchange Board of India (SEBI) has notified two separate sets of Second Amendment Regulations for 2026, both dated 10th July 2026. The first amends the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, streamlining provisions relating to transfer and transmission of securities. The second amends the SEBI (Alternative Investment Funds) Regulations, 2012, introducing changes to scheme launch fees, documentation timelines, and merchant banker obligations. This article summarises both notifications and their implications for listed entities, AIF Managers, and market intermediaries.

---

Part I: SEBI (LODR) (Second Amendment) Regulations, 2026

Notification No.: SEBI/LAD-NRO/GN/2026/312 Date of Notification: 10th July 2026 Effective From: Date of publication in the Official Gazette

Background

The SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 were published on 2nd September 2015 and were last amended on 22nd January 2026. This Second Amendment for 2026 focuses specifically on the procedural framework governing transfer and transmission of securities by listed entities.

Key Amendments

Provision	Earlier Position	Amended Position
Regulation 40(7)	Listed entity required to comply with requirements specified under Regulation 40, including procedural requirements specified in Schedule VII	Listed entity shall comply with all procedural requirements with respect to transfer and transmission of securities as specified by the Board from time to time
Regulation 61(4)	Reference to requirements "specified in Schedule VII"	Reference substituted with "as specified by the Board from time to time"
Schedule VII	Clause (C) formed part of the Schedule	Clause (C) omitted

Analysis

The amendment effectively delinks the detailed procedural requirements for transfer and transmission of securities from the static text of Schedule VII, and vests SEBI with the flexibility to prescribe or revise such procedures separately — most likely through circulars issued from time to time. This is consistent with SEBI's broader regulatory approach of keeping principal regulations static while allowing operational detail to be governed through subordinate instruments.

Listed entities and their compliance teams should review internal SOPs, RTA agreements, and investor service manuals that currently reference Schedule VII, as the specific clause structure being relied upon may no longer be valid post-amendment.

---

Part II: SEBI (Alternative Investment Funds) (Second Amendment) Regulations, 2026

Notification No.: SEBI/LAD-NRO/GN/2026/313 Date of Notification: 10th July 2026 Effective From: Date of publication in the Official Gazette

Background

The SEBI (Alternative Investment Funds) Regulations, 2012 were published on 21st May 2012 and were last amended earlier in 2026. This Second Amendment introduces changes to scheme fee payment, filing timelines, Board comment compliance, and merchant banker involvement under Regulations 12 and 19D.

Key Amendments

Provision	Amendment
Regulation 12(1)	Scheme fees to be paid along with fees specified in the Second Schedule; new proviso inserted exempting the first scheme launched by an AIF from scheme fee payment
Regulation 12(2)	Filing timeline reduced from thirty days to ten working days; reference to Second Schedule fees replaced with "documents specified by the Board"; earlier proviso omitted
Regulation 12(3)	Substituted — Board may communicate comments, if any, to the merchant banker or Manager after filing of specified documents
Regulation 12(3A) (new)	Inserted — merchant banker or Manager shall ensure compliance with Board comments issued under sub-regulation (3)
Proviso after Regulation 12(3)	Exemption scope widened from sub-regulation (3) alone (for large value funds for accredited investors) to cover sub-regulations (3) and (3A) for Accredited Investors only funds
Regulation 19D(4)	Reference to "through a merchant banker" omitted
Regulation 19D(5)	Omitted in entirety

Analysis

The amendment reduces the scheme documentation and filing timeline from thirty days to ten working days, tightening the compliance window for AIF Managers. The exemption for first-time scheme launches from scheme fee payment offers relief for AIFs at the point of registration. Simultaneously, the insertion of Regulation 12(3A) creates an affirmative compliance obligation on merchant bankers and Managers to act upon Board comments, rather than treating such comments as advisory in nature.

The omission of merchant banker involvement under Regulation 19D(4) and the removal of Regulation 19D(5) suggest a reduction in mandatory merchant banker intermediation for certain filings, which may streamline processes for AIF Managers going forward.

---

Conclusion

Both amendments, notified on the same date, reflect SEBI's continuing shift toward principle-based regulation with operational flexibility retained through Board-specified procedures and timelines. Listed entities should revisit their transfer and transmission SOPs in light of the LODR amendment, while AIF Managers, sponsors, and merchant bankers should recalibrate scheme filing timelines and compliance workflows to align with the revised AIF framework.

SEBI Notifies FVCI (Amendment) Regulations, 2026: Registration and Fee Framework Shifts to INR

 Introduction

The Securities and Exchange Board of India ("SEBI" or "the Board") has notified the Securities and Exchange Board of India (Foreign Venture Capital Investors) (Amendment) Regulations, 2026 vide Notification No. SEBI/LAD-NRO/GN/309 dated July 3, 2026, published in the Gazette of India (Extraordinary), Part III, Section 4. The amendment further modifies the Securities and Exchange Board of India (Foreign Venture Capital Investors) Regulations, 2000, which were last amended in 2025 vide Notification No. SEBI/LAD-NRO/GN/2025/280.

The amendment is issued in exercise of powers conferred under Section 30(1) of the Securities and Exchange Board of India Act, 1992.

Effective Date

The Amendment Regulations shall come into force on the one hundred eightieth day from the date of their publication in the Official Gazette.

Key Amendments

1. Omission under Regulation 3(3)

Regulation 3(3) has been amended to omit the words "by the fee specified in the Second Schedule and," delinking the fee prescription from this specific regulatory clause.

2. Revision of Fees in the Second Schedule

The Second Schedule to the Regulations has been substantially revised, with fees earlier denominated in US Dollars now converted to Indian Rupees (eligible foreign exchange equivalent). The revised fee structure is summarized below:

Clause	Particulars	Earlier Fee (USD)	Revised Fee (INR equivalent)
Clause (1)	Registration fee	$2,500	Rs. 2,30,000
Clause (2)	Application fee	$100	Rs. 9,000
Clause (5)	Late fee	$5	Rs. 500
Clause (5)	Renewal fee	$150	Rs. 15,000

Additionally, under Clause (1), the timing for payment of the registration fee has been revised. Previously payable "at the time of submission of the Form," the fee is now required to be paid prior to the grant of certificate of registration.

3. Substitution of Clause (6) — Remittance Mechanism

Clause (6) of the Second Schedule has been substituted in its entirety. The revised provision requires every Designated Depository Participant (DDP) to remit fees collected from Foreign Venture Capital Investors, in INR, to the Board as follows:

• Initial registration: Within five working days from the date of grant of the certificate of registration to the foreign venture capital investor, along with details in the format as may be specified from time to time.
• Renewal fees / late fees: Within five working days from the date of receipt of such fees by the Designated Depository Participant, along with details in the format as may be specified from time to time.

Analysis and Implications

This amendment marks a structural shift in the FVCI fee framework, moving away from USD-denominated fees toward INR-based equivalents payable in eligible foreign exchange. Key implications include:

• For Foreign Venture Capital Investors: Fee planning and budgeting will now need to account for INR-denominated amounts, with payment due before certificate issuance rather than at the application stage.
• For Designated Depository Participants: A tightened five-working-day remittance timeline has been codified for both initial registration fees and renewal/late fees, along with a standardized reporting format requirement.
• Compliance Timeline: Given the 180-day implementation runway, DDPs and prospective FVCI applicants have a transition window to align internal processes with the revised fee structure and remittance mechanics before the amendment takes effect.

Conclusion

The SEBI (Foreign Venture Capital Investors) (Amendment) Regulations, 2026 reflect SEBI's continued effort to streamline and rationalize the regulatory fee architecture applicable to foreign venture capital investors, with a clear shift toward INR-denominated compliance and tighter remittance discipline for Designated Depository Participants. Entities involved in FVCI registration and related depository functions should review internal fee-processing workflows ahead of the effective date.

Reserve Bank - Integrated Ombudsman Scheme, 2026: Key FAQs

 Regulatory Update

The Reserve Bank of India (RBI) has released a detailed set of Frequently Asked Questions on the Reserve Bank - Integrated Ombudsman Scheme, 2026 (RB-IOS, 2026), which came into force with effect from July 1, 2026, replacing the Reserve Bank - Integrated Ombudsman Scheme, 2021.

Overview

RB-IOS, 2026 is a cost-free, expeditious and non-adversarial alternate grievance redress mechanism for customer complaints involving deficiency in service by Regulated Entities covered under the Scheme. Complaints received before July 1, 2026, appeals arising from decisions under RB-IOS, 2021, and execution of awards issued thereunder will continue to be governed by RB-IOS, 2021 and related RBI instructions.

Alternate Grievance Redress Framework

The AGR Framework of the Reserve Bank comprises the Offices of the RBI Ombudsman, the Centralised Receipt and Processing Centre (CRPC), Consumer Education and Protection Cells (CEPCs), and the Consumer Education and Protection Department (CEPD), which assists the Appellate Authority and processes appeal cases.

Entities Covered

RB-IOS, 2026 applies only to specified categories of Regulated Entities, namely:

• All Commercial Banks, Regional Rural Banks, State Co-operative Banks, Central Co-operative Banks, Scheduled Primary (Urban) Co-operative Banks, and Non-Scheduled Primary (Urban) Co-operative Banks with deposit size of Rs. 50 crore and above as on the date of the audited balance sheet of the previous financial year;
• NBFCs registered with RBI, excluding Housing Finance Companies, Core Investment Companies, IDF-NBFCs, NBFC-IFCs, NOFHCs, Primary Dealers and Mortgage Guarantee Companies, which either are authorized to accept deposits or have customer interface with asset size of Rs. 100 crore and above;
• Non-bank Prepaid Payment Instrument Issuers; and
• Credit Information Companies.

Complaints against RBI-regulated entities not covered under the Scheme are not maintainable and may be addressed under other applicable grievance redress arrangements, such as the Consumer Education and Protection Cells.

Procedure for Filing a Complaint

A complainant must first approach the concerned Regulated Entity. A complaint may be filed before the RBI Ombudsman only if no reply is received within 30 days (or the timeline specified by RBI, NPCI or Card Network guidelines, whichever is higher) or if the complainant is dissatisfied with the resolution provided. The complaint must be filed within 90 days from the date on which the applicable timeline expires or the date of the last communication from the Regulated Entity, whichever is later.

Complaints may be filed through the following modes:

• Online: Complaint Management System (CMS) portal
• E-mail: Addressed to the Centralised Receipt and Processing Centre
• Physical mode: Duly signed complaint form with supporting documents sent to the Centralised Receipt and Processing Centre, Reserve Bank of India, Central Vista, Sector 17, Chandigarh - 160017

There is no charge or fee for filing or resolving complaints under the Scheme.

Non-Maintainable Complaints

Certain categories of complaints are not maintainable under RB-IOS, 2026, including complaints not addressed directly to the RBI Ombudsman, complaints with incomplete information, complaints filed before first approaching the Regulated Entity, complaints relating to commercial judgment or decisions of a Regulated Entity, disputes between a vendor and a Regulated Entity, matters sub judice before a Court, Tribunal or Arbitrator, and grievances arising from compliance with orders of a judicial or quasi-judicial authority, among others.

Resolution Process

On receipt, a complaint is examined for maintainability. If found maintainable, it is forwarded to the concerned Regulated Entity for a response, following which the complaint may be resolved through:

1. Settlement — facilitation, advisory or conciliation resulting in a mutually acceptable resolution;
2. Award — where deficiency in service is established, directing the Regulated Entity to take remedial action and/or pay compensation; or
3. Rejection — where no deficiency in service is found or the complaint falls under a non-maintainability ground, with reasons recorded.

Compensation

There is no monetary limit on the amount involved in a dispute brought before the RBI Ombudsman. However, the RBI Ombudsman may award compensation up to Rs. 30 lakh for consequential loss suffered by the complainant, and up to Rs. 3 lakh for loss of time, expenses incurred, and harassment or mental anguish suffered.

Appellate Mechanism

An appeal lies only against an Award passed by the RBI Ombudsman. A complainant aggrieved by an Award may appeal to the Appellate Authority within 30 days of receipt of the Award, extendable by a further 30 days for sufficient cause. A Regulated Entity may also appeal against an Award, subject to prior sanction, except where the Award arises from the entity's failure to furnish required information or documents. The Appellate Authority may dismiss the appeal, allow it and set aside the Award, remand the matter for fresh disposal, modify the Award, or pass any other appropriate order.

Statutory Basis

The directions under RB-IOS, 2026 have been issued by the Reserve Bank of India in exercise of its statutory powers to regulate grievance redress mechanisms for customers of Regulated Entities, consistent with its consumer protection mandate.

Key Takeaway

Regulated Entities should review and update internal grievance redress standard operating procedures to align with the timelines and maintainability requirements under RB-IOS, 2026, and ensure customer-facing teams are equipped to handle complaints within the prescribed response windows to minimise escalation to the Ombudsman.

SEBI Notifies Foreign Portfolio Investors (Amendment) Regulations, 2026

Regulatory Update

The Securities and Exchange Board of India (SEBI), vide Notification No. SEBI/LAD-NRO/GN/2026/310 dated July 03, 2026, has notified the Securities and Exchange Board of India (Foreign Portfolio Investors) (Amendment) Regulations, 2026, further amending the SEBI (Foreign Portfolio Investors) Regulations, 2019. The amendments primarily shift various fee and charge provisions from US Dollar denominations to Indian Rupee equivalents, along with certain structural and procedural changes.

Statutory Basis

These regulations have been notified in exercise of powers conferred under Section 30(1) read with Section 11(1), Section 11(2)(ba), Section 12(1) and Section 12(1A) of the Securities and Exchange Board of India Act, 1992, and Section 25 of the Depositories Act, 1996.

Commencement

The regulations shall come into force on the one hundred eightieth day from the date of their publication in the Official Gazette, except sub-regulation III of Regulation 3, which came into force with immediate effect upon publication.

Key Amendments

1. Regulation 3(2) — Omission of Fee Reference

The words "the fee specified in Part A of the Second Schedule and" have been omitted from Regulation 3(2).

2. Regulation 43B(2) — Revision of Fee

The fee prescribed under Regulation 43B(2) has been revised from US $1000 to Rs. 90,000 in eligible foreign exchange equivalent.

3. First Schedule — Insertion of New Paragraph IV

Paragraphs IV and V of the First Schedule have been renumbered as V and VI respectively. A new Paragraph IV has been inserted, requiring disclosure of the Date of Birth/Incorporation/Agreement/Partnership or Trust Deed/Formation of Body of Individuals or Association of Persons of the Foreign Portfolio Investor.

4. Second Schedule, Part A — Clause (1)

• The fees of US $2500 and US $250 have been revised to Rs. 2,30,000 and Rs. 23,000 in eligible foreign exchange equivalent, respectively.
• The timeline for payment has been changed from "at the time of submission of the Form" to "prior to the grant of certificate of registration."

5. Second Schedule, Part A — Clause (4)

Under the first proviso:

• US $50 has been revised to Rs. 4,500 in eligible foreign exchange equivalent.
• US $5 has been revised to Rs. 500 in eligible foreign exchange equivalent.

6. Second Schedule, Part A — Clause (5) (Substituted)

Every Designated Depository Participant (DDP) shall remit fees collected from Foreign Portfolio Investors, in INR, to the Board as follows:

Scenario	Timeline
Initial registration	Within 5 working days from the date of grant of certificate of registration, along with prescribed details
Fees for subsequent blocks after registration, or late fees	Within 5 working days from the date of receipt of such fees by the DDP, along with prescribed details

7. Second Schedule, Part C — Clause (1)

The fee of US $800 payable in respect of each subscriber to an offshore derivative instrument (ODI) issued has been revised to Rs. 75,000 in eligible foreign exchange equivalent.

Key Takeaway

FPIs and Designated Depository Participants should update their internal fee computation, registration form processes, and remittance workflows to align with the revised INR-denominated fee structure and the new documentation and timeline requirements, well ahead of the effective date falling on the 180th day from Gazette publication.

SEBI Reviews Norms for Utilization of Interest or Income from IPF of Depositories

The Securities and Exchange Board of India (SEBI), vide Circular No. HO/47/14/13(4)2026-MRD-POD3/I/15577/2026 dated July 07, 2026, has revised the norms governing the utilization of interest or income earned from the Investor Protection Fund (IPF) of Depositories. The revised provisions bring uniformity and consistency between the IPF frameworks applicable to Depositories and Stock Exchanges.

Background

Paragraph 4.46 of Section 4 of the SEBI Master Circular No. SEBI/HO/MRD/MRD-PoD-1/P/CIR/2024/168 for Depositories dated December 03, 2024, prescribed comprehensive guidelines for the Investor Protection Fund of Depositories. Paragraph 4.46.1.1(C)(i)(2) of the said Master Circular provided that 100% of interest or income received from investments made from the IPF was to be treated as corpus of the IPF.

Pursuant to representations received from Depositories, and to bring uniformity in the treatment of IPF-related interest or income across Depositories and Stock Exchanges, the matter was placed before the Secondary Market Advisory Committee (SMAC) of SEBI. Based on the recommendations of SMAC, comments received through public consultation, and subsequent internal deliberations, SEBI has now revised the applicable provisions.

Revised Provisions

The provisions under clause 4.46.1.1(B)(i)(c) and clause 4.46.1.1(C)(i)(2) of Section 4 of the Master Circular dated December 03, 2024, stand modified as follows:

4.46.1.1(B) — Contribution to IPF of Depository

The Depository shall contribute at least 95% of the interest or income received every year out of any investments made from the IPF.

4.46.1.1(C) — Utilization of IPF and Interest or Income from IPF

SN	Particulars	Utilization
2	Interest or income received out of any investments made from the IPF	(a) At least 95% of the interest or income from IPF received every year shall be ploughed back to strengthen the IPF corpus; and
		(b) A maximum of 5% of the interest or income from investments of the IPF received during the financial year may be utilized to meet expenses related to dedicated employees of the IPF Trust, and other administrative and statutory expenses such as applicable taxes, audit fees, and charity commissioner's fee. Where such expenses exceed the 5% limit, the excess shall be borne by the Depository. Where the 5% amount remains unutilized in the same financial year, it shall be ploughed back to the IPF.

Applicability

The provisions of the circular shall come into effect from September 01, 2026.

Directions to Market Infrastructure Institutions (MIIs)

Depositories, as MIIs, are directed to:

1. Take necessary steps and put in place necessary systems for implementation of the revised provisions;
2. Make necessary amendments to the relevant bye-laws, rules, and regulations, wherever applicable; and
3. Bring the provisions of the circular to the notice of market participants, including investors, and disseminate the same on their respective websites.

Statutory Basis

The circular has been issued in exercise of powers conferred under Section 11(1) of the Securities and Exchange Board of India Act, 1992, read with Section 26(3) of the Depositories Act, 1996, and Regulation 97 of the SEBI (Depositories and Participants) Regulations, 2018, to protect the interests of investors in securities and to promote the development of, and to regulate, the securities market.

Key Takeaway

Depositories must recalibrate their IPF fund management processes to align with the revised 95:5 utilization framework, ensure bye-law amendments are carried out well in advance of the September 01, 2026 effective date, and put in place monitoring mechanisms to track annual expense utilization against the 5% ceiling.

SEBI Amends Municipal Debt Securities Regulations, 2026

 Introduction

The Securities and Exchange Board of India has notified the Securities and Exchange Board of India (Issue and Listing of Municipal Debt Securities) (Amendment) Regulations, 2026 vide Notification No. SEBI/LAD-NRO/GN/2026/305 dated 1st July, 2026. The amendment further modifies the Securities and Exchange Board of India (Issue and Listing of Municipal Debt Securities) Regulations, 2015, and comes into force on the date of its publication in the Official Gazette.

The amendment introduces several structural and disclosure-related changes aimed at broadening the municipal debt securities framework, enabling ESG-linked issuances, formalising Special Purpose Vehicle (SPV) financing structures, and strengthening investor protection through enhanced disclosure requirements.

Key Amendments

1. New Definitions Inserted

Regulation 2(1) has been amended to introduce two new definitions:

• "Retail Individual Investor" [Regulation 2(1)(va)]: An individual investor who applies or bids for municipal debt securities for a value not exceeding two lakh rupees.
• "Working Day" [Regulation 2(1)(zb)]: Defined separately for two distinct purposes — (i) for announcement of the bid/issue period, working day excludes Saturdays, Sundays and public holidays on which commercial banks in the specified city are open for business; and (ii) for the period between the bid/issue closing date and listing of securities, working day refers to trading days of the stock exchanges, excluding Saturdays, Sundays and notified bank holidays.

2. Issuance of ESG Debt Securities

A new Regulation 4F has been inserted, permitting issuers to issue and list Environment, Social and Governance (ESG) Debt Securities, subject to compliance with conditions specified under the Securities and Exchange Board of India (Issue and Listing of Non-Convertible Securities) Regulations, 2021 and circulars issued thereunder.

3. Pooled Financing through Special Purpose Vehicle

A new Regulation 5A has been introduced to govern SPVs constituted under the Pooled Finance Development Fund Scheme of the Government of India. Where an issuer is such an SPV, the constituent Municipalities are required to enter into an agreement with the issuer prior to raising funds, and this arrangement must be disclosed in the offer document. Such SPVs must be structured either as a Trust or a Company.

4. Electronic Mode of Advertisement

Regulation 9(1) has been amended to permit issuers to advertise public issues through electronic modes, including online newspapers or the website of the issuer or stock exchange, in addition to national dailies. A proviso has been added requiring issuers opting for electronic advertisement to also publish a notice in a national daily displaying a QR code and link to the complete advertisement.

5. Incentives for Specified Investor Categories

Regulation 22B has been amended to permit issuers to offer incentives, in the form of additional interest or discount on issue price, to senior citizens, women, serving and retired defence personnel, widows and widowers of defence personnel, retail individual investors, or any other category specified by the Board. Such incentives are available only to the initial allottee and do not carry forward upon transfer or transmission of the securities.

6. New Schedule IB — Disclosures for Article 243W SPVs

A new Schedule IB has been inserted after Schedule IA, applicable specifically to SPVs set up for raising funds for entities performing functions entrusted under Article 243W of the Constitution of India. This Schedule prescribes comprehensive disclosure requirements in the offer document/placement memorandum, covering:

Disclosure Category	Key Requirements
General Information	Issuer details, committee composition, key managerial personnel, trustees, auditors, rating agencies
Capital Structure	Constitution documents, shareholding pattern, borrowing resolutions
Objects of Issue	Project-wise cost breakup, implementation schedule, issue expenses
Financial Information	Three-year financial statements, revenue sources, property tax collection data, borrowings
Legal Information	Pending litigation, outstanding dues, material developments
Government Approvals	Applicable regulatory approvals and declarations
Risk Factors	Materiality-based classification and disclosure of project, operational, credit and liquidity risks

7. Refinancing Disclosures

Corresponding amendments have been made to Regulation 6(2)(a), Regulation 14A(2)(a), and Regulation 27(3) to reference Schedule IB where applicable. Additionally, paragraph 5 of Schedule I has been amended to require enhanced disclosure where a project is refinanced, including details of existing lenders, interest rates, repayment schedules, past restructuring, and the reason for refinancing.

8. Minor Drafting Correction

Regulation 23(2) has been amended to omit a superfluous word ("of") preceding "independent directors," correcting a drafting inconsistency in the composition requirements for the relevant committee.

Conclusion

The 2026 amendment reflects SEBI's continued focus on expanding the municipal debt market in India, particularly through formal recognition of ESG-linked instruments and pooled SPV financing structures under Article 243W. The introduction of Schedule IB significantly enhances disclosure standards for SPV-based municipal issuances, aligning them more closely with the broader NCS disclosure framework. Municipal issuers, arrangers, and trustees should review offer document templates and compliance checklists to align with the revised requirements.

Compliance. Simplified.

SEBI Notifies Two Amendments: Intraday Borrowing for Mutual Funds and Revised Custodian Fee Structure

 The Securities and Exchange Board of India (SEBI) has notified two separate sets of amendment regulations on July 3, 2026, addressing distinct areas of the securities market regulatory framework  mutual fund borrowing norms and custodian fee structures. 

1. SEBI (Mutual Funds) (Amendment) Regulations, 2026

Background

The Securities and Exchange Board of India (Mutual Funds) Regulations, 2026 were originally published in the Gazette of India on January 15, 2026 vide notification No. SEBI/LAD-NRO/GN/2026/294. SEBI has now amended these regulations vide notification No. SEBI/LAD-NRO/GN/2026/307, dated July 3, 2026.

Key Amendment

Under Chapter VII of the principal regulations, Regulation 42(2) has been substituted in its entirety. The revised provision clarifies that nothing in sub-regulation (1) shall restrict mutual funds from undertaking intraday borrowing to address timing mismatches between the outflows and inflows of a scheme, subject to such conditions as may be specified by the Board.

Analysis

This amendment addresses a recurring operational challenge faced by asset management companies: same-day gaps between the timing of redemption payouts from a scheme's account and the corresponding inflows expected into that account. Previously, the general restriction on borrowing by mutual fund schemes under Regulation 42(1) created ambiguity as to whether such short-term, intraday borrowing to bridge these gaps was permissible.

The amended provision removes this ambiguity by expressly carving out intraday borrowing for timing mismatches from the scope of the borrowing restriction. However, this flexibility is not unconditional — it remains subject to conditions that the Board is yet to specify. Fund houses and their compliance teams should accordingly watch for a follow-up circular or framework from SEBI detailing the permissible limits, disclosure requirements, and operational safeguards attached to this facility.

Effective Date

The amendment came into force on the date of its publication in the Official Gazette, i.e., July 3, 2026.

---

2. SEBI (Custodian) (Amendment) Regulations, 2026

Background

The Securities and Exchange Board of India (Custodian of Securities) Regulations, 1996 were originally published in the Gazette of India on May 16, 1996 vide S.O. No. 344(E), and were last amended on September 23, 2025 by the SEBI (Custodian) (Amendment) Regulations, 2025 vide notification No. SEBI/LAD-NRO/GN/2025/267. SEBI has now further amended these regulations vide notification No. SEBI/LAD-NRO/GN/2026/308, dated July 3, 2026.

Key Amendments

The amendment fundamentally restructures the fee payment cycle for custodians from an annual basis to a monthly basis:

• Regulation 9(d) and Regulation 26(i): The word "annual" has been substituted with "monthly" in both provisions.
• Second Schedule, Part A, clause (iii): The fee structure has been revised from an annual fee of Rs. 10,00,000 or 0.0005 (whichever is applicable) to a monthly fee of Rs. 85,000 or 0.0000416.
• Second Schedule, Part B, clause (II): The heading "Payment of annual fee" has been substituted with "Payment of monthly fee," and the operative sub-clauses have been revised as follows:
  • Sub-clause (1): From the commencement of the amendment regulations, the monthly fee is payable within 15 days of completion of each month.
  • Sub-clause (2): A custodian granted registration on or after the commencement of the amendment regulations shall pay a proportionate monthly fee for the month of registration, followed by the full monthly fee for every subsequent month during which the registration subsists.
  • Sub-clause (3): A custodian granted registration before the commencement of the amendment regulations shall pay a proportionate annual fee for the financial year in which the amendment commences, payable within 15 days of such commencement, and thereafter shall pay the full monthly fee for every subsequent month. Any annual fee already paid in respect of a period falling after the commencement date shall be proportionately adjusted against the amount payable under this transitional arrangement.
  • Sub-clause (4): The word "annual" has been substituted with "monthly."

Analysis

This amendment represents a structural shift in how custodians remit registration fees to SEBI — moving away from a single annual lump-sum payment toward a rolling monthly payment cycle. The revised monthly fee of Rs. 85,000 (or 0.0000416, as applicable) is designed to be broadly equivalent to the erstwhile annual fee of Rs. 10,00,000 (or 0.0005) when annualized, suggesting the change is intended primarily as a shift in payment frequency rather than a substantive fee increase.

The transition provisions are particularly relevant for existing custodians. Those already registered before the commencement date must pay a proportionate annual fee for the transition financial year within 15 days of commencement, with any previously paid annual fee adjusted against this amount, before moving fully to the monthly cycle thereafter. Newly registered custodians, by contrast, step directly into the monthly fee framework from the outset.

Custodians should review their internal billing, accounting, and compliance calendars well ahead of the effective date to ensure timely computation of the transitional proportionate fee and adjustment of any fee already paid.

Effective Date

Unlike the mutual funds amendment, this notification does not take immediate effect. It shall come into force on October 1, 2026, providing custodians a transition window of approximately three months from the date of notification.

---

Conclusion

Both amendments, notified on the same day, reflect SEBI's continued fine-tuning of the operational and financial framework governing market intermediaries. While the mutual funds amendment provides operational flexibility to address short-term cash flow mismatches, the custodian amendment recalibrates the fee payment cycle to align with a monthly billing model. Market participants — particularly asset management companies and custodians — are advised to assess the applicability of these changes to their internal processes and ensure compliance within the respective effective timelines.