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June 14, 2026
The Dispatch

Definition

Investor Protection Fund (IPF)

The IPF is a fund maintained by exchanges to compensate investors in case a broker defaults or fails to meet its obligations.

Each exchange (NSE, BSE) maintains an Investor Protection Fund to compensate clients of a defaulting or expelled broker, up to a specified limit per investor. It is a safety net, funded partly by a share of transaction charges and fines.

While it cannot cover market losses (those are your own risk), the IPF protects against intermediary failure, such as a broker misusing or being unable to return client funds and securities. It is one of several SEBI-backed investor-protection mechanisms.

Related terms

  • Clearing CorporationA clearing corporation is the entity that clears and settles trades on an exchange, becoming the buyer to every seller and the seller to every buyer through novation, and guaranteeing settlement.
  • SCORES (Grievance Redressal)SCORES is SEBI's online platform where investors can lodge complaints against listed companies and market intermediaries and track their resolution.
  • BrokerageBrokerage is the fee your stockbroker charges for executing your buy and sell orders, and it is only one part of your total trading cost.

Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.