The Securities and Exchange Board of India (SEBI) amended the eligibility criteria for claimants under the Investor Protection Fund (IPF) and Consumer Protection Fund (CPF) guidelines through a circular issued on 29 September.
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Following the amendment, an eligible claim that arises within three years from the date of expiry of the specified period in the notice published by the stock exchange, for reasons beyond the control of the claimant:
(i) Will be considered eligible for compensation from the IPF/CPF where the defaulter member’s funds are inadequate;
(ii) Will not be considered eligible for compensation from the IPF/CPF where the defaulter member’s surplus funds have been returned to the defaulter member. Instead, the claim will be borne by the stock exchange.
SEBI has clarified that claims arising after the three-year period may be treated as civil disputes.
SEBI has also clarified that where litigation is pending against the defaulter member, the stock exchange may retain the residual amount, if any, realized from the auction of the card of the defaulter member until the litigation has been concluded.
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