To ensure seamless settlement of funds and convenience to investors, Sebi on Thursday said stock brokers should maintain current accounts in appropriate number of banks for holding clients' funds.
The clarification comes after Sebi received representations regarding the issue being faced by stock brokers.
They requested the regulator to issue instructions in respect of maintenance of current accounts in multiple banks.
"It is clarified that stock brokers should maintain current accounts in appropriate number of banks (subject to the maximum limit prescribed by stock exchanges/Sebi from time to time) for holding the client funds (client account), for settlement purposes (settlement account) and any other accounts mandated by stock exchanges such as exchange dues account," Sebi said in a circular.
This is subject to the condition that brokers are using these accounts for their defined purpose, it added.
In August, the capital markets regulator had asked mutual funds to maintain current accounts in an appropriate number of banks for receiving subscription amount and payment of redemption and dividend.
The move was aimed at facilitating financial inclusion, convenience of investors and ease of doing business.
In August 2020, the Reserve Bank of India (RBI) had instructed that banks shall not open current accounts for customers who have availed credit facilities in the form of cash credit or overdraft from the banking system and all transactions shall be routed through the CC/OD account.
On a review, however, the RBI, in December 2020, permitted banks to open specific accounts, without such restriction.
Photograph: Danish Siddiqui/Reuters