SEBI Investment Advisers Second Amendment: Key Changes

The Securities and Exchange Board of India (SEBI) has recently released new regulations that aim to ensure investment advisers using Artificial Intelligence (AI) tools prioritize the security, confidentiality, and integrity of client data. These regulations make it clear that investment advisers must take full responsibility for the use of AI tools in providing investment advice, and ensure compliance with all relevant laws.

Additionally, the regulations state that if an investment adviser offers advisory services for products or services that fall outside of SEBI’s oversight, they must disclose this information to the client. Clients should be aware that they will not have recourse to the SEBI for any grievances related to these products or services.

It’s crucial for investment advisers to be transparent with clients about the extent to which AI tools are used in providing investment advice. This disclosure helps clients understand the processes behind the advice they receive.

In other news, the Reserve Bank of India (RBI) has mandated that banks must maintain the Cash Reserve Ratio (CRR) at 4.25 percent of their Net Demand and Time Liabilities (NDTL) starting from December 14, 2024. This requirement is essential for banks to ensure financial stability and liquidity in the banking system.

Furthermore, the RBI has revised interest rates on Foreign Currency (Non-resident) Accounts (Banks) Deposits, specifically FCNR(B) deposits. The new interest rate will apply to fresh FCNR(B) deposits made from December 6, 2024 onwards. This revision aims to provide more flexibility and competitive rates for foreign currency deposits.

Lastly, SEBI has also introduced new regulations regarding Mutual Funds, outlining the obligations and operational procedures for Mutual Fund lite asset management companies. These regulations aim to streamline processes and ensure transparency in the mutual fund industry.

Overall, these regulatory updates are designed to uphold the integrity of the financial system, protect investors, and promote transparency in the financial sector. By staying informed and compliant with these regulations, financial institutions and advisers can maintain trust and credibility with their clients.