A custodian bank is like a safe-keeper for a foreign fund’s money and assets. Here is how it works in simple steps:
- Holding the assets
- The foreign fund buys stocks, bonds, or other investments in India.
- The custodian bank keeps those investments in its name on behalf of the fund.
- Keeping records
- It keeps track of exactly how many shares or bonds the fund owns.
- It records every time the fund buys or sells something.
- Settlement of trades
- When the fund makes a trade, the custodian makes sure money and assets move correctly.
- It sends the payment to the seller and makes sure the shares arrive.
- Collecting income
- If a company pays a dividend or a bond pays interest, the custodian bank collects that money.
- Then it passes the money on to the foreign fund.
- Reporting and compliance
- The custodian gives regular statements to the fund showing what it holds and how much it is worth.
- It also helps meet local rules and tax requirements so the fund stays legal.
With over 3 years of experience in financial markets, we focus on simplifying global and Indian markets through clear, practical insights. Our expertise also extends to the evolving landscape of digital finance, including blockchain, stablecoins, and decentralized finance (DeFi).