SEBI released consultation paper on May 11, 2026 reviewing utilization of interest/income from Investor Protection Fund (IPF) corpus of depositories NSDL and CDSL. Paper examines current deployment mechanisms, investment guidelines, and utilization patterns for investor compensation. Seeks stakeholder feedback on optimizing IPF corpus usage for enhanced investor protection. Comes amid growing retail investor participation requiring stronger protection mechanisms. Comments invited from market participants, depositories, and investor associations.

The Investor Protection Fund (IPF) maintained by depositories NSDL and CDSL accumulates substantial corpus from penalties, fees, and investment income. SEBI's review addresses concerns about optimal utilization of this growing fund for actual investor protection rather than passive accumulation. The consultation paper likely examines expanding IPF usage beyond traditional compensation for depository errors to broader investor education, dispute resolution, and market development initiatives. Key focus areas include investment policy for IPF corpus, criteria for fund utilization, governance framework, and measurement of investor protection outcomes. This review reflects SEBI's evolving approach to proactive investor protection as retail participation surges post-pandemic. The paper seeks to balance fund preservation with active deployment for investor welfare, potentially reshaping how depositories contribute to market ecosystem development. Stakeholder feedback will guide policy refinements ensuring IPF serves its intended purpose effectively while maintaining adequate corpus for contingencies.