The new regulations from SEBI strictly prohibit the broker to pledge client securities to any third party, even if the securities are not fully paid and if broker has kept it in the pool account until the full amount is paid by the client. But yes, if a broker goes bust and if your stocks is in the pool account and/or you have funds lying with the broker, you potentially could have problem recovering it. This is almost exactly like the way it is with the banks where your funds lie. Banks are allowed to leverage on your funds, whereas a broker isn’t. In that way, there isn’t too much of a risk. Usually if brokers go bust, it is most likely a scam run by the broker. And brokers who scam, you as a client get to know well in advance by their practices - not giving payout in time, unauthorized trades, securities moved without authorization, wrong billing, etc. It is best to move out of such brokerage firms.
IPF covers 25lks in all per client. In such a case a complaint needs to be raised with the exchanges.