New Delhi. The Investor Protection and Education Fund (IPEF) of the Securities and Exchange Board of India (Sebi) has expanded sharply amid growing risks from digital fraud linked to the securities market, fake trading platforms, investment advice on social media and scams such as digital arrest. The fund reached ₹969.8 crore in FY26, but spending remained extremely low in comparison. According to available data, the fund grew nearly four-fold between FY23 and FY26, while expenditure increased by only 2.2% to ₹4.7 crore during the same period.
This means Sebi spent only about 0.4% of its total IPEF in FY26. The widening gap between the size of the fund and spending on investor awareness and protection has emerged at a time when financial fraud through digital channels is becoming increasingly sophisticated. The situation has raised questions over how effectively available resources are being used and whether Sebi’s investor-protection strategy is keeping pace with the changing nature of financial fraud.
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The IPEF is intended to support investor protection, financial awareness and education, and help investors understand risks associated with the securities market. As online investing has expanded, fraudsters have also adopted more sophisticated methods to target investors. Social media platforms, messaging applications, fake websites and fraudulent trading applications are increasingly being used to lure people with promises of attractive or unusually high returns.
In fake trading platform and investment advisory scams, fraudsters often pose as market experts, investment advisers or financial professionals to gain the confidence of potential victims. They then persuade investors to deposit money into trading accounts or applications where the profits displayed on the screen may not represent genuine investments. When victims attempt to withdraw their money, they may be asked to pay additional amounts in the name of taxes, processing charges or other fees.
Digital arrest scams have also added a new dimension to financial crime. In such cases, fraudsters impersonate police officers, investigators or other government officials and intimidate victims by claiming that they are involved in an investigation. Victims are then pressured into transferring money from their bank accounts or investments on the pretext of verification or investigation. Limited awareness and growing dependence on digital financial services can create opportunities for such fraudsters.
Industry stakeholders believe that the limited utilisation of investor-protection funds could partly be linked to a lack of clear directions and procedures governing their use. They argue that the available resources could be deployed more extensively for financial literacy campaigns, detection of digital investment fraud, investor alert systems and stronger grievance-redressal mechanisms.
The expansion of online investing has also brought a growing number of new and small investors into the market. These investors face challenges in identifying misleading information circulating on social media, fake financial experts and unrealistic return promises. Investor education programmes can play an important role in helping them verify the legitimacy of investment schemes, intermediaries and platforms before committing their money.
The fact that only a small portion of the fund has been spent despite the substantial increase in its size has raised questions about how effectively resources earmarked for investor protection are reaching the ground. As financial fraud risks continue to evolve, there may be a need to reassess spending priorities and ensure that available funds are directed towards areas where investors face the greatest risks.
The issue has also come to the government’s attention, with a decision on further action still pending. Experts and industry stakeholders say that simply increasing the size of the investor protection fund is not enough. With digital financial crimes becoming more sophisticated, transparent and effective utilisation of the fund, timely investor alerts, wider financial education and stronger grievance-redressal mechanisms could play a more significant role in protecting investors.
About the author — Suvedita Nath is a science student with a growing interest in cybercrime and digital safety. She writes on online activity, cyber threats, and technology-driven risks. Her work focuses on clarity, accuracy, and public awareness.
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