The short
- Flexibility: Deposit can be in units of a liquid or an overnight MF (or keep a bank deposit)—lien in favour of IAASB/RAASB.
- Cashflow relief: Potentially higher yield than plain deposits; still conservatively managed.
- Deadline: Align by Sept 30, 2025; administrators will publish process specifics.
What SEBI changed
SEBI amended the IA/RA regulations and, via circular, allowed the mandated deposit to be maintained either as a scheduled-bank deposit or as units of a liquid/overnight mutual fund, marked under lien to the administrator (IAASB/RAASB). The circular became effective on Aug 12, 2025, with a compliance date of Sept 30, 2025.
Result: smaller advisory/research outfits get working-capital relief without compromising administrator control.
How-to — step-by-step (illustrative)
1) Choose scheme
- Prefer overnight or high-quality liquid funds; examine portfolio credit quality and maturity ladders.
- Check exit load policy and cut-off times for purchases/redemptions.
2) Open folio & invest
- Invest the required deposit amount (as per IA/RA regulations).
- Keep investment and KYC records handy for the administrator.
3) Mark lien
- Initiate lien marking in favour of IAASB/RAASB via AMC/RTA as per the administrator’s SOP.
- Confirm lien status on the statement; redemptions need lien release.
4) Ongoing
- Maintain the required amount (NAV-linked); top up if needed.
- Review scheme changes; keep board/partner approvals on file.
Risks & controls
- NAV fluctuation: Even ultra-short products can move—monitor daily and maintain a buffer.
- Liquidity windows: Adhere to cut-off times; some liquid funds may have short-term exit loads.
- Operational errors: Test the lien creation/release process before relying on it.
Ops checklist — IAs/RAs & administrator
| Actor | Action |
|---|---|
| IA/RA | Adopt a board-approved Deposit Policy (scheme selection, buffer %, review cadence); document lien confirmations. |
| IAASB/RAASB | Publish SOPs with AMC/RTA formats for lien creation/release; set reporting templates and audit trails. |
| Auditors | Verify deposit valuation vs regulatory requirement at period-end; check lien status. |
FAQ
- How big is the deposit? As specified under the IA/RA regulations for your registration category; check the latest SEBI notification.
- Can I split between bank deposit and MF units? The circular allows either form; splitting may be operationally feasible—confirm with IAASB/RAASB.
- Which funds qualify? Liquid or Overnight mutual funds registered with SEBI—choose schemes with strong credit discipline and transparent portfolios.
Note: This is an informational explainer, not legal or investment advice. Confirm details with IAASB/RAASB circulars and your counsel.