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Custodians don't need to set up separate legal entity for financial services, says SEBI
This story was originally published at 21:25 IST on 18 June 2025
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--SEBI: Custodians don't need to set up separate entity for fincl svcs
NEW DELHI – The Securities and Exchange Board of India's board on Wednesday reversed its December decision that mandated setting up a separate legal entity by custodians to undertake financial services activities that aren't regulated by SEBI or any other financial services regulator. The move is aimed to improve the ease of doing business of custodians, but subject to certain conditions.
Custodians are companies that provide security to and maintain accounts of clients like foreign portfolio investors, mutual funds, and portfolio managers. According to reports, India has 17 registered custodians. After SEBI makes a list of all the activities of custodians that it regulates, it will allow custodians to provide financial services that are under the regulatory oversight of other financial sector regulators under the same legal entity.
While custodians may share manpower and infrastructure to provide other financial services, it must have adequate mechanisms to address issues of conflicts of interest, SEBI said. "If any non-Bank/ non-Bank associated Custodian offers services that are not directly overseen by any financial sector regulator, they must ensure adequate mechanisms to ensure adequate disclosures, transparency, and management of any conflict of interest," SEBI added. End
Reported by Anand JC
Edited by Ashish Shirke
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