Regulation 26 - Appointment of custodian - Securities and Exchange Board of India (Mutual Funds) Regulations, 1996

Appointment of custodian 26. (1) The mutual fund shall appoint a Custodian to carry out the custodial services for the schemes of the fund and sent intimation of the same to the Board within fifteen days of the appointment of the Custodian: 5 [ Provided that in case of a gold exchange traded fund scheme, the assets of the scheme being gold or gold related instruments may be kept in the custody of a custodian registered with the Board ] 6 [ Provided further that in case of a silver exchange traded fund scheme, the assets of the scheme being silver or silver related instruments may be kept in the custody of a custodian registered with the Board: ] 2 [Provided further that in case of a real estate mutual fund scheme, the title deed of real estate assets held by it may be kept in the custody of a custodian registered with the Board.] 4 [ Provided 7 [ further ] that mutual fund schemes investing in exchange traded commodity derivatives may appoint a custodian to have custody of the underlying goods in case of physical settlement of such contracts. ] (2) No custodian in which the sponsor or its associates hold 50 per cent or more of the voting rights of the share capital of the custodian or where 50 per cent or more of the directors of the custodian represent the interest of the sponsor or its associates shall act as custodian for a mutual fund constituted by the same sponsor or any of its associates or subsidiary company: 3 [Provided that where the sponsor or its associates hold 50 per cent or more of the voting rights of the share capital of the custodian, such custodian may act as custodian for a mutual fund constituted by the same sponsor or any of its associates or subsidiary company if: (i) the sponsor has a net worth of at least twenty thousand crore rupees at all points of time; (ii) 50 per cent or more of the directors of the custodian are those who do not represent the interest of the sponsor or its associates; (iii) the custodian and the asset management company of a mutual fund are not subsidiaries of each other; (iv) no person is a director of both the custodian and the asset management company of a mutual fund; and (v) the custodian and the asset management company of a mutual fund sign an undertaking that they will act independently of each other in their dealings with the scheme.] *********** NOTES:- 1 Inserted by the SEBI (Mutual Funds) (Amendment) Regulations, 2006, w.e.f. 12-1-2006. 2 Inserted by the SEBI (Mutual Funds) (Amendment) Regulations, 2008, w.e.f. 16-4-2008. 3 Inserted by the SEBI (Mutual Funds) (Third Amendment) Regulations, 2013 w.e.f 19-8-2013 4 Inserted vide NOTIFICATION No. SEBI/LAD-NRO/GN/2019/011 dated 26-04-2019 5. substituted vide Notification No. SEBI/LAD/NRO/GN/2020/07 dated 06-03-2020 before it was read as 1 [Provided that in case of a gold exchange traded fund scheme, the assets of the scheme being gold or gold related instruments may be kept in custody of a bank which is registered as a custodian with the Board.] 6. Inserted vide Notification No. SEBI/LAD-NRO/GN/2021/56 dated 09-11-2021 w.e.f. 09-12-2021 7. Substituted vide Notification No. SEBI/LAD-NRO/GN/2021/56 dated 09-11-2021 w.e.f. 09-12-2021 before it was read as also