August 14, 2025

Sebi has brought an exciting change for investment advisers (IAs) and research analysts (RAs)! Now, they can use liquid mutual funds and overnight mutual funds to meet their mandatory deposit requirements instead of only relying on scheduled bank deposits. What’s the big deal? These funds are like financial magic wands - liquid mutual funds can be quickly cashed out, and overnight mutual funds invest in super-short debt instruments that mature in a day. Currently, IAs and RAs must keep a certain amount of money deposited with a scheduled bank, which is held as a lien in favor of their respective supervisory bodies - IAASB for investment advisers and RAASB for research analysts. But following feedback from industry players and public consultation, Sebi's board approved this new, more flexible approach in their June 2025 meeting. The fresh rules were officially announced on August 6 and 7, 2025. The circular from Sebi said, "In order to ensure compliance with the deposit requirements under the norms, IAs and RAs will now maintain a deposit in the form of units of a liquid mutual fund or an overnight mutual fund or as a deposit maintained with a scheduled bank." The deposited units will carry a lien, just like before, securing the interests of IAASB or RAASB as applicable. What does this mean for those in the financial advisory and research analyst fields? More freedom and flexibility to manage their required deposits without locking up money in traditional bank deposits. The deadline to follow the updated rules is September 30, 2025. To keep the wheels turning smoothly, BSE, which acts as both IAASB and RAASB, has been ordered to set up the necessary systems and alert registered entities about these new changes. So, investment advisers and research analysts — time to shake up your deposit strategies with Sebi’s latest masaledar move!

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Tags: Sebi, Investment advisers, Research analysts, Mutual funds, Regulations, Deposits,