SEBI Fee Limits, the MITC Client Agreement and CeFCoM Explained
Understand the fee caps for RAs and IAs, advance fee and refund rules, the MITC and client agreement, and BSE's CeFCoM fee route.
Fee limits for individual and HUF clients
For individual and HUF clients who are not accredited investors, SEBI caps what RAs and IAs can charge. An RA may charge at most Rs 1,51,000 per year per family of client for all research services, excluding statutory charges. An IA must choose one of two modes: assets under advice (AUA) mode, capped at 2.5% of AUA per year per family, or fixed fee mode, capped at Rs 1,51,000 per year per family, across all services. The family is counted as one client.
These caps shape pricing pages directly. An RA selling a premium plan at Rs 1,20,000 and an add-on at Rs 50,000 to the same family would cross the cap. BSE revises the Rs 1,51,000 limit once every three years using the Cost Inflation Index after consulting SEBI, so check for a revised figure before each pricing review. IAs billing on AUA should keep demat or unit statements to support each invoice.
Advance fees, refunds and free trials
Both RAs and IAs may take fees in advance for at most one year. If a client ends the service early, the RA must refund fees for the unexpired period on a pro rata basis and may not charge any breakage fee. The IA must also refund fees for the unexpired period, but may keep a breakage fee of up to one quarter's fee. BSE asked RAs in April 2025 to update the MITC advance fee clause, which still says one quarter in Annexure B of the RA Master Circular.
IAs face two further limits. They must not offer free trials of advice to prospective clients, and they must not accept part payments for any product or service. That rules out demo calls with live recommendations and token booking amounts. For RAs, nothing may be called free in advertising unless it is free without conditions. Sales teams should review their scripts, landing pages and WhatsApp templates for words like trial, demo or token amount, and replace them with a plain description of the paid service and its fees.
The MITC and the client agreement
An RA must disclose its terms and conditions, including the minimum mandatory terms in Annexure B and the standard MITC, and get client consent before giving any research service or charging any fee. For institutional investors and qualified institutional buyers, consent is optional but disclosure is still required. An IA must sign an agreement with each client containing the Annexure A terms and the standard MITC, and give no advice and charge no fee until the client has signed and received a copy.
The MITC includes client safety statements that both RAs and IAs must carry. They cannot execute trades without consent, do not handle client funds or securities, offer no assured or fixed return schemes and will never ask for login credentials or OTPs. Before advising, an IA must also complete a risk profile and get the client's consent on it by registered email or on paper, and every piece of advice must be suitable for that profile.
Payments, @valid UPI and CeFCoM
Fees must come only through traceable banking channels such as cheque, demand draft, NEFT, RTGS, IMPS or UPI, and never in cash. Under a June 2025 SEBI circular, RAs and IAs must obtain and display a validated @valid UPI ID, with the suffix ra or ia, available to investors from 1 October 2025. Remove any personal wallet or cash option from the payment page, and publish the @valid ID with its QR code.
Client terms must also include guidance on the Centralised Fee Collection Mechanism (CeFCoM) run by BSE, and the RA or IA must encourage clients to use it. CeFCoM is optional for clients and has been operational since 1 October 2024. A short paragraph on the payment page and in the welcome email meets the guidance duty and gives clients a regulated way to pay. General information, not legal advice.
- RAs are capped at Rs 1,51,000 per family per year for individual and HUF clients.
- IAs choose AUA mode up to 2.5% or fixed fee mode up to Rs 1,51,000 per family per year.
- Advance fees cannot exceed one year; RAs charge no breakage fee and IAs keep at most one quarter.
- IAs must not offer free trials or accept part payments.
- Fees come only through banking channels, with a @valid UPI ID and guidance on CeFCoM.
Review a pricing page for an RA or IA. Check each plan and any add-ons against the per-family cap, the one-year advance limit and the refund rules. Confirm that the payment page lists only banking channels, shows the @valid UPI ID and explains CeFCoM.
Check your understanding
1. What is the maximum breakage fee an IA may keep on early termination?
2. Which payment method is not allowed for RA and IA fees?
3. What is CeFCoM?
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