SEBI Strengthens Securities Pledge Norms

In a move to bolster the integrity of securities pledging, the Securities and Exchange Board of India (SEBI) has issued a directive mandating depositories to fortify procedures. This includes the introduction of unambiguous undertakings and a standardized pledge request form for better clarity and compliance.

The directive, which is in accordance with the Indian Contract Act, further stipulates that notifications must be sent to involved parties upon the invocation of a pledge. The aim is to ensure the pledgee is appropriately documented as the beneficial owner, enhancing transparency in these transactions.

The implementation deadline for these new norms is set for April 6, 2026, giving depositories ample time to adjust their processes to meet regulatory requirements. These changes are expected to bring more security and accountability to the practice of pledging securities.