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India's markets regulator on Wednesday proposed changes to the regulatory framework for custodians, including doubling their minimum net worth requirement.
Custodians provide services such as safekeeping of assets and maintenance of securities accounts for clients like foreign portfolio investors, mutual funds, and portfolio managers. Currently, India has 17 registered custodians.
Assets under their custody jumped to Rs 278.5 trillion by September 2024 from Rs 2.7 trillion in 2002.
Given the substantial growth, the Securities and Exchange Board of India (Sebi) has proposed to bring regulations in line with those for stock brokers.
It has proposed that custodians should have a minimum net worth of Rs 100 crore ($11.9 million) against Rs 50 crore currently.
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Sebi has also proposed a framework for orderly winding down of these firms, in line with that for stock brokers.
It has suggested new frameworks for business continuity planning and disaster recovery for custodians.
Other proposals include doing away with the requirement for vaults for custodians who do not hold physical assets.
The regulator has sought public comments on the proposals by Nov. 28.
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