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ARTICLE · 05 MARCH 2026

SEBI Revises Pledge Creation And Invocation Rules Through Depositories

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The Securities and Exchange Board of India ("SEBI") by way of circular dated 05.02.2026 ("Pledge Circular")1 , has introduced enhanced compliance requirements in the framework for creation and invocation...

IndiaCorporate/Commercial Law
Sagus Legal LLP
Sagus Legal LLP

REGULATORY AND POLICY UPDATES

SEBI modifies framework for creation/ invocation of pledge of securities through depositories.

The Securities and Exchange Board of India ("SEBI") by way of circular dated 05.02.2026 ("Pledge Circular")1 , has introduced enhanced compliance requirements in the framework for creation and invocation of pledge of securities through the depository system as prescribed under Paragraph 4.13 of the SEBI Master Circular for Depositories dated 03.12.2024 ("Master Circular for Depositories").

The Pledge Circular introduces the following changes to ensure compliance with Sections 176 (Pawnee's right where Pawnor makes Default) and Section 177 (Defaulting pawner's right to redeem) of the Indian Contract Act, 1872 ("Contract Act"):

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