The Securities and Exchange Board of India (SEBI) revises the framework governing “unpaid shares,” focusing on how such shares are handled in investors’ accounts. Under the updated rules, securities pledged under the unpaid shares mechanism remain in investors’ demat accounts rather than being used elsewhere. SEBI also bars brokers from using these pledged securities to raise funds from banks or non-banking finance companies (NBFCs). The change is intended to tighten controls around the use of securities linked to the unpaid shares arrangement, limiting intermediary access to pledged holdings for financing purposes. While brokers and market participants may still operate within the unpaid shares structure, the regulator’s update restricts how pledged securities can be deployed and where they must be maintained. The revised framework signals tighter compliance expectations for brokers participating in the unpaid shares process, particularly regarding custody and any attempts to leverage the pledged securities for external borrowing.