Central

Section 23K of The Securities Contracts (Regulation) Act, 1956

All sums realised by way of penalties under this Act shall be credited to the Consolidated Fund of India.

Summary

Any money collected as penalties under this Act must be credited directly to the Consolidated Fund of India.
No penalty funds can be kept or used by the Securities and Exchange Board of India for its own operational costs.
The stock exchanges are not allowed to retain any of these penalty sums for their own business or reserves.
This ensures that all penalty collections are treated as general government revenue under the control of the nation's parliament.

Practical examples

1In November 2026, an adjudicating officer collects a penalty of ten lakh rupees from a company for a listing agreement violation. Rather than putting this money in SEBI's bank account or giving it to the local stock exchange, the entire ten lakh rupees is transferred to the Consolidated Fund of India.

2A stock broker pays a penalty of one lakh rupees in December 2026 for failing to enter into client agreements. SEBI's finance department processes the payment and deposits the money into the Consolidated Fund of India under the government revenue head.

FAQ

1. Where does the penalty money collected under the Act go?

All penalty money collected must be credited to the Consolidated Fund of India.

2. Can SEBI use the penalty money to pay for its own inquiries or staff salaries?

No, the law requires all penalty sums to go to the Consolidated Fund of India, meaning SEBI cannot keep or spend this money.

3. Do stock exchanges get a share of the penalties collected from their members?

No, all penalties realized under the Act are sent entirely to the Consolidated Fund of India.

4. Who owns the Consolidated Fund of India?

It is the main account of the Central Government of India, where all government revenues are deposited.

Test yourself

Q1.Under Section 23K of The Securities Contracts (Regulation) Act, 1956, where must all sums realized by way of penalties be deposited?

Q2.Under Section 23K of The Securities Contracts (Regulation) Act, 1956, can the Securities and Exchange Board of India retain penalty collections to cover its administrative expenses?

Q3.Under Section 23K of The Securities Contracts (Regulation) Act, 1956, which types of collections are required to be deposited into the Consolidated Fund of India under this specific provision?

Q4.Under Section 23K of The Securities Contracts (Regulation) Act, 1956, how does the handling of penalties compare to the handling of disgorgement amounts mentioned under Section 23JA?

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