SEBI simplifies securities credit with direct demat move from April, cuts wait by 120 days

In a major step towards enhancing investor convenience and improving operational efficiency, the Securities and Exchange Board of India (SEBI) has issued a new circular eliminating the need for issuance of a Letter of Confirmation (LOC) for various investor service requests. The move is part of SEBI’s broader initiative aimed at easing the process of doing investment and business in the Indian securities market. 

Key changes announced 

Under the current system, listed companies and their Registrars to an Issue and Share Transfer Agents (RTAs) issue an LOC for investor service requests — such as: 

• Issuance of duplicate security certificates 
• Transmission and transposition of securities 
• Claims from unclaimed suspense accounts 
• Corporate actions 

This LOC is then submitted by investors to their Depository Participant (DP) to facilitate credit of securities to their demat accounts — a process that can take up to 150 days. 

To simplify and accelerate this workflow, SEBI has now decided to do away with the LOC requirement entirely. 

New framework and benefits 

Under the revised framework: 

• RTAs and listed companies will directly credit securities to the investor’s demat account. 
• This will be done after necessary due diligence, removing the intermediate step of issuing and submitting the LOC. 
• The new process is expected to reduce the credit timeline from 150 days to approximately 30 days. 
• Risks related to loss, misuse, or pilferage of LOCs will also be eliminated. 

Implementation timeline 

• The new provisions will come into effect from April 2, 2026. 
• Any LOCs issued before this date will remain valid and can be used for dematerialization within the existing timeline. 

Objective and Broader Implications 

SEBI has introduced this circular as part of its continued efforts to make investing in the securities market more seamless and investor-friendly. By removing the requirement for a Letter of Confirmation (LOC) and facilitating the direct credit of securities into demat accounts, SEBI aims to simplify procedures that have traditionally been cumbersome and time-consuming. 

This reform is expected to significantly enhance the ease of doing investment in India by reducing delays and eliminating unnecessary steps in the dematerialisation process. Furthermore, it contributes to greater operational efficiency for both listed companies and RTAs, reducing administrative burdens and chances of errors or losses. 

Most importantly, the move strengthens investor protection by minimising the risks associated with physical paperwork — such as loss, pilferage, or misuse of LOCs — thereby increasing trust in the demat ecosystem. Overall, the initiative aligns with SEBI’s broader agenda of modernizing market infrastructure and improving the investor experience.