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MUMBAI/NEW DELHI: The market regulator’s fund to protect and educate investors has swollen manifold over the years, but its spending has barely moved even as risks from financial influencers and digital arrests loom. The matter has come to the notice of the government, which is yet to decide what to do about it.
The Securities and Exchange Board of India’s Investor Protection and Education Fund (IPEF) has grown almost four-fold to ₹969.8 crore in FY26 from levels in FY23, according to a Mint analysis of Sebi data. However, expenditure from the fund rose 2.2% over the period to ₹4.7 crore. This means the regulator used only 0.4% of its total IPEF in FY26.
The low utilization of IPEF has drawn attention within government circles.
Concerns over underutilization of investor protection funds in the country “have been on the agenda of late in the government’s highest offices and have seen inter-ministerial memos seeking a possible strategy on whether the funds are not very well aligned with ground realities or need some kind of a strategic overhaul,” a senior official with direct knowledge of the developments told Mint, requesting anonymity.
Mint’s emails to the finance ministry (which oversees the market regulator), the ministry of electronics and information technology (the nodal cyber security entity), the Prime Minister’s Office and Sebi did not receive a response until publishing time.
The underutilization comes amid rising risks of cyber frauds, digital arrests and finfluencers, which have taken centre stage in the Indian markets. Sebi’s 2025 survey, covering 91,950 households across urban and rural India, found that 62% of investors make some or most investment decisions based on finfluencer recommendations. Sebi said in its annual report for FY26 that many such influencers operate without accountability or verified performance data.
The regulator’s biggest expense was investor education – ₹2.26 crore in FY26. The rest was spent on seminars, financial literacy, committee meetings and “others.” Sebi’s annual report did not specify what “others” refers to.
IPEF utilization has varied sharply over the years. Spending peaked at ₹30.4 crore in FY24, when Sebi used 5.4% of the funds available. However, utilization of the fund towards investor protection and education remained limited to ₹2.8 crore.
An amount of ₹11.9 crore was “IPEF expenses refunded to Sebi fund” and ₹15.8 crore was “transferred to SEBI-IPO Reallocation Tranche 3 Account.”
It added ₹208.3 crore worth of funds to IPEF in FY26.
This limited spending, the official said, led Prime Minister Narendra Modi to mention digital frauds and the importance of investor protection in his monthly ‘Mann Ki Baat’ broadcast on 22 February.
A second official who also requested anonymity said that since then, investor protection funds and the government's role have been discussed many times—at ministries including the finance ministry and the ministry of electronics and information technology and collaboratively with industry stakeholders too. Mint could not independently determine if Sebi was a part of these discussions.
The IPEF regulations give Sebi a wide mandate for using the fund. It can be spent on investor education through seminars, training, research and publications as well as awareness programmes through print and electronic media. Sebi is required to have a committee that recommends investor education and protection activities that can be undertaken by the regulator. The IPEF advisory committee has eight members, including three Sebi officers.
“Low utilization may mean that money earmarked for investor education, legal assistance, awareness, investor protection and other permitted purposes is not reaching investors at the required scale. It can also raise questions about whether programme design, outreach and measurement are adequate,” said Alay Razvi, managing partner at Accord Juris, a law firm.
Industry stakeholders said investor protection funds are likely underutilized because of the lack of clear directions and directives.
“There may be a need to broaden and redefine the set of activities that may be considered beneficial to investors and under investor protection,” said Deep Narayan Mukherjee, partner and director – risk management and data science at BCG India. “This can lead to increased utilization of these funds in areas such as research and development for cyber security solutions against investor frauds in collaborations with universities. There could also be better researched guidelines in consumer protection, retail and corporate governance. All of this may be beneficial to the ecosystem in overall, if a portion of the available investor protection funds were to be used.”
Though New Delhi has taken cognizance of the issue, the central government is divided on whether intervention is warranted. It remains conflicted over the matter, with no clear resolution noted as yet, said another official familiar with the development.
“Due to the current climate of misleading stock market advisories by ill-informed influencers or digital arrest cases, the government can play the role of a concerned party in a sensitive sector that mandates higher spending every year to reduce the chances of people falling prey to scams of various kinds. All of this is under discussion at various levels, but nothing has been decided yet,” the official added.
Lawyers said the widening gap between the IPEF funds and their utilization merits closer scrutiny.
“With growing fund size, there should be outcome-based transparency. Sebi should periodically disclose category-wise deployment, objectives, beneficiaries, geographical and digital reach, measurable outcomes and unutilized balances, accompanied by independent impact evaluation for material programmes,” said Rohit Jain, managing partner at Singhania & Co.
“For investors, the concern is that securities-market risks are evolving rapidly, including online investment scams, impersonation and misleading investment content on social-media platforms. Accordingly, the issue is whether a substantially larger corpus is translating into proportionately greater investor protection and education,” said Pranav Bhaskar, senior partner at SKV Law Offices.
Apoorva is a Mumbai-based journalist at Mint who covers the Securities and Exchange Board of India (SEBI), tracking the pulse of India’s capital markets, regulatory developments and the people who operate within them. She holds a postgraduate diploma in business and financial journalism from the Asian College of Journalism, where she developed a strong foundation in markets, companies, and economic policy. She began her journalism journey with an internship at Bloomberg, where she worked across beats such as real estate, infrastructure, capital markets, and deals, which helped her understanding of business and finance.<br><br>She is guided by the belief that everything in this world can be explained in simple and fewer words, and that idea shapes how she approaches her writing. She aims to cut through complexity and present nuanced regulatory and financial developments in a way that is both accessible and meaningful to readers.<br><br>When she is not tracking market chatter, Apoorva can usually be found deep into a fiction novel or out on a long run. She is also a trained classical dancer in Bharatanatyam, Mohiniyattam, and Kathakali.
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