Sebi removes letter of confirmation requirement, allows direct credit of securities to demat accounts

Synopsis

The Securities and Exchange Board of India, SEBI, is simplifying investment processes. A Letter of Confirmation for credit of securities will no longer be required. Instead, securities will be directly credited to investors' demat accounts. This change aims to speed up the process significantly. The new system will be effective from April 2, 2026.

The Securities and Exchange Board of India (SEBI) on Friday said it has done away with the requirement of issuing a Letter of Confirmation for credit of securities and will allow direct credit of securities to investors’ demat accounts.

In a circular issued on January 30, Sebi said the move is aimed at simplifying and streamlining the process of credit of securities arising from investor service requests such as issuance of duplicate share certificates, transmission, transposition, claims from unclaimed suspense accounts and corporate actions.

At present, listed companies and registrars and transfer agents issue a Letter of Confirmation to investors, which is then submitted to the depository participant for credit of securities. Sebi said this process typically takes around 150 days.

Under the revised framework, listed companies and registrars and transfer agents will directly credit securities to the investor’s demat account after carrying out the required due diligence. Sebi said the change is expected to reduce the timeline for credit of securities from about 150 days to around 30 days.

The regulator also said the new process will reduce risks associated with loss or misuse of the Letter of Confirmation.

The provisions of the circular will come into effect from April 2, 2026. Sebi clarified that Letters of Confirmation issued before this date may continue to be used by investors for dematerialisation within the prescribed timelines.

The circular has been issued as part of Sebi efforts to improve ease of doing investment and operational efficiency.

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