SECURITIES AND EXCHANGE BOARD OF INDIA

Memorandum to the Board

Note on the Internal Policy Guidelines

for Investment of Surplus Funds of SEBI

SEBI Board in its meeting held on December 4, 2008 desired that a note
on investment policy of SEBI may be submitted for a review.

Note on the internal policy guidelines for investment of surplus funds of

SEBI was placed at the eighty-eighth meeting of the Board held on April
16, 2004 at Mumbai (copy enclosed). Following are the salient features of
the said guidelines:
1. List of approved securities / instruments for the purpose of
investment: The surplus funds of SEBI are permitted to be invested in
the Treasury Bills, Bank Deposits (including new private sector Banks
such as IDBI Bank, ICICI Bank, HDFC Bank and Axis Bank),
Certificate of Deposits, Commercial Papers of PSUs, Units of UTI /
Other MFs (including Money Market Mutual Funds), PSU Bonds and
Governments Securities.
2. Maturity profile of the investment
The decision in regard to tenure of the investments is made taking in to
account the interest rate scenario prevailing at any point of time and
projected expenditure.
3. Details of exposure limit with various institutions
The exposure limit with single institutions is specified at 20% of total
investment.
4. Manner of routing of investment
The investment other than bank deposits be placed only through PSU
intermediaries and merchant bankers.

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5. Internal approvals relating to investment decisions
All investment proposal/ matters are required to be submitted to
Committee of Executive Directors (CoED) for its decision and approval.
In case of urgency, Executive Director (Administration) can either take
investment decisions independently and obtain the post facto approval
of the CoED or submit the investment proposal to all the Executive
Directors by circulation, for their approval.
6. Monthly reporting system
The aggregate of investments/ dis-investments done during a
particular month as also the yield on investments made are reported to
the office of Whole Time Member / Chairman in a specified format on
the first working day of the following month as a part of Management
Information System (MIS).
7. Manner of record keeping of documents related to investment
All relevant records in respect of the investments made by SEBI are
maintained in the form of accounting entries, documentation of
decisions taken, and a computerized database containing details of
each and every investment made. All documents like fixed deposit
receipts, bond certificates etc. are kept in safe custody with appropriate
locking arrangements.
8. Ethics and conflict of interest.
The conflict of interest is balanced by exercising utmost care, skill,
prudence and diligence as necessarily required for managing public
money. Besides, service regulations of SEBI employees clearly
prohibit accepting any gifts, consideration etc in official dealings, thus
eliminating scope of personal interests influencing the investment
decisions.

The Board approved the aforesaid policy and also directed that the
exposure limit for investment with single institution at any point of time
should be fixed at 20% of the total investment.

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There are no changes in the procedures and practices being followed
related to investment as approved by the Board except that as per the
Chairman’s approval dated September 29, 2008 ‘exposure limit’ in respect
of public sector banks remains at 20% of total investment but the same
has been reduced to 10% in respect of new private sector banks (ICICI
Bank, Axis bank and HDFC Bank/ HDFC Ltd.).

Copy of Board note and minutes of eighty-eighth meeting of the Board

held on April 16, 2004 are enclosed as Annexure A.

Total investment of SEBI as on 31.01.09 is at Rs.1169.17 Crore. The

weighted average CAGR (Compounded Annual Growth Rate) of the
portfolio as on 31.01.2009 is 10.89% and weighted average annualized
yield is 11.27%. The details of each investment are enclosed as
Annexure B. The maturity profile of the portfolio as on 31.01.2009 is as
under (details in Annexure C).

Particulars Maturing Within

1 Year 2 Years 3 Years 5 Years >5 Total
Years
% of Total 60.21 28.77 6.74 - 4.28 100.00
Amount in 704.00 336.35 78.82 - 50.00 1169.17
Rs. Crore

The aforesaid guidelines in respect of SEBI’s investment are submitted for

consideration and further direction by the Board.

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Annexure A

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Annexure B

(This has been excised for reasons of confidentiality)

Annexure C

(This has been excised for reasons of confidentiality)

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