Mumbai: To help aggrieved investors, market regulator Sebi on Monday reviewed norms related to compensation from the investor protection fund (IPF) in case of defaults by brokers.
In a circular, Sebi said that "in case any eligible claim arises within three years from the date of expiry of the specified period, such claim shall be considered eligible for compensation from IPF or CPF in case where the defaulter member's funds are inadequate".
It further said that in these cases, IPF or CPF Trust would have to satisfy itself that such claim could not have been filed during the specified period for reasons beyond the control of the claimant.
The corpus of the IPF or Customer Protection Fund (CPF) is maintained by stock exchanges to compensate investors in case a broker defaults.
The regulator said those claims would not be considered eligible for compensation from IPF or CPF in case where the surplus funds of the defaulter member is returned to the defaulter member.
The decisions have been taken following deliberations by Secondary Market Advisory Committee (SMAC) and representations of the stock exchanges.
The Securities and Exchange Board of India (Sebi) said "in cases where any litigations are pending against the defaulter member, the residual amount, if any, may be retained by the stock exchange until such litigations are concluded".
It said that any claim received after three years from the date of expiry of the specified period may be dealt with as a civil dispute.
