SEBI to move from annual to monthly fee structure for custodians from 1 October 2026
The Securities and Exchange Board of India has proposed a structural change in the way fees are collected from custodians registered under the Securities and Exchange Board of India (Custodian) Regulations, 1996. Instead of the existing once-a-year payment mechanism, SEBI intends to introduce a system of monthly fee payments, effective from 1 October 2026.
This change is aimed at aligning the frequency of regulatory fee collection with ongoing market activity, improving cash flow predictability for SEBI, and standardising periodic payments across intermediaries. The proposal has its genesis in recommendations of the Audit Committee of the Board and has received support from key market forums.
Existing framework for custodian fees
Current annual fee requirement
Under Regulation 9(d) read with the Second Schedule of the Securities and Exchange Board of India (Custodian) Regulations, 1996, every custodian is presently required to:
- Pay an annual fee of ₹10,00,000, or
- 0.0005% of Assets Under Custody (AUC),
- Whichever is higher.
This fee is calculated with reference to the AUC of the custodian for each financial year.
Due date and collection pattern
- The annual fee is currently payable once in a year, for each financial year.
- The payment must be made within one month from the end of the financial year.
- For FY 2025-26, SEBI received a total of ₹1,75,80,07,468 as custodian fees, which was collected in April 2026 as a consolidated amount.
Note: The AUC-based component ensures that the fee structure scales with the volume of assets handled by the custodian, thereby linking the regulatory cost to the size of operations.
Rationale for revisiting the fee periodicity
Recommendation of the Audit Committee
On 20 March 2025, the Audit Committee of the Board reviewed the manner and periodicity of fee collection from various intermediaries. As part of this review, the Committee recommended that SEBI:
- Move from annual fee collection to monthly or quarterly payments, and
- Introduce more frequent inflows to stagger receipts instead of receiving a bulk sum once a year.
This recommendation triggered a detailed internal review by SEBI, specifically in relation to the custodian segment.
Industry consultation and stakeholder feedback
To ensure that the proposed change is practical and aligned with market participants’ operational systems, SEBI consulted with:
- Custodians themselves,
- The Custodians and Designated Depository Participants Standards Setting Forum (CDSSF), and
- The FPI Advisory Committee (FAC).
After deliberations with these forums:
- CDSSF and FAC supported the shift in periodicity,
- They concurred with the broad contours of SEBI’s proposal on monthly fee collection, as outlined in para 4 of the Board memorandum.
Key point: The move has not been unilaterally imposed; it stems from both internal governance inputs (Audit Committee) and external stakeholder consensus (CDSSF, FAC).