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Securities And Exchange Board Of India

Securities and Exchange Board of India (Custodian) Regulations, 1996

SECURITIES AND EXCHANGE BOARD OF INDIA
India

Securities and Exchange Board of India (Custodian) Regulations, 1996

Rule SECURITIES-AND-EXCHANGE-BOARD-OF-INDIA-CUSTODIAN-REGULATIONS-1996 of 1996

Published on 16 May 1996
Commenced on 16 May 1996
[This is the version of this document from 16 May 1996.]
[Note: The original publication document is not available and this content could not be verified.]

Securities and Exchange Board of India (Custodian) Regulations, 1996Published vide Notification Gazette of India, Extra, Part 2, Section 3(ii), dated 16.5.1996.Last Updated 25th March, 2019S.O. 344(E), dated 16th May, 1996. - In exercise of the powers conferred by section 30 of the Securities and Exchange Board of India Act, 1992 (15 of 1992) the Securities and Exchange Board of India hereby makes the following, namely:-

Chapter I
Preliminary

1. Short title and commencement.

(1)These regulations may be called the [Securities and Exchange Board of India (Custodian) Regulations, 1996] [Substituted 'Securities and Exchange Board of India (Custodian of Securities) Regulations, 1996' by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).].

(2)They shall come into force on the date of their publication in the Official Gazette.

2. Definitions.

- In these regulations unless the context otherwise requires:-

(a)"Act" means the Securities and Exchange Board of India Act, 1992 (15 of 1992);

(b)"certificate" means a certificate of registration granted by the Board under these regulations;

(c)"client" means any person who has entered into an agreement with a [custodian] [Substituted 'custodian of securities' by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).] to avail of custodial services provided by the [custodian] [Substituted 'custodian of securities' by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).];

(d)[custodian] [Substituted 'custodian of securities' by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).] means any person who carries on or proposes to carry on the business of providing custodial services;

(e)[ "custodial services" in relation to securities [or goods] [Substituted by Notification No. 11/LC/GN/15/2008/130775, dated 4.7.2008.] of a client or gold or gold related instruments held by a mutual fund or title deeds of real estate assets held by a real estate mutual fund scheme in accordance with the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 means, [the] [Inserted by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).] safekeeping of such securities [or goods] [Inserted by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).] or gold or gold related instruments or title deeds of real estate assets and providing services incidental thereto, and includes -

(i)maintaining accounts of securities [or goods] [Inserted by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).] or gold or gold related instruments or title deeds of real estate assets of a client;

(ii)collecting the benefits or rights accruing to the client in respect of securities [or goods] [Inserted by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).] or gold or gold related instruments or title deeds of real estate assets;

(iii)keeping the client informed of the actions taken or to be taken by the issuer of securities, having a bearing on the benefits or rights accruing to the client; and

(iiia)[ keeping the client informed of the actions taken or to be taken with respect to the goods held on its behalf;] [Inserted by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).]

(iv)maintaining and reconciling records of the services referred to in sub-clauses (i) to [(iiia)] [Substituted by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996)].]

(f)"custody account" means an account of a client maintained by a [custodian] [Substituted 'custodian of securities' by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).] in respect of securities;

(g)"enquiry officer" means an account of a client maintained by a [custodian] [Substituted 'custodian of securities' by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).] in respect of securities;

(h)"Form" means any of the forms set out in the First Schedule;

(ha)[ "goods" means the goods notified by the Central Government under clause (bc) of section 2 of the Securities contracts (Regulation) Act, 1956 and forming the underlying of any commodity derivative contract;] [Inserted by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).]

(i)"inspecting officer" means an inspecting officer appointed by the Board under regulation 21;

(j)"Schedule" means a Schedule annexed to these regulations.

(k)[ "securities" shall have the meaning assigned to it in clause (h) of section 2 of the Securities Contracts (Regulation) Act, 1956.] [Inserted by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).]

Chapter II
Registration Of Custodians Of Securities

3. Application for grant of certificate.

(1)Any person proposing to carry on business as [custodian] [Substituted 'custodian of securities' by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).] on or after the commencement of these regulations shall make an application to the Board for grant of a certificate.

(2)Any person who is carrying on business as a [custodian] [Substituted 'custodian of securities' by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).] on the date of commencement of these regulations shall make an application to the Board for grant of certificate within a period of three months from the date of such commencement:Provided that the Board may, in special cases, where it is of the opinion that it is necessary to do so for reasons to be recorded in writing may extend the period up to a maximum of six months from the date of such commencement.

(3)An application for grant of a certificate under sub-regulation (1) or subregulation (2) shall be made in Form A and shall be accompanied by an application fee as specified in Part A of the Second Schedule and be paid in the manner specified in Part B thereof.

(4)Any person referred to in sub-regulation (2) who fails to make an application for grant of certificate within the period or the extended period specified therein, shall cease to carry on any activity as [custodian] [Substituted 'custodian of securities' by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).] and shall be subject to the directions of the Board with regard to the transfer of records, documents or securities relating to his activities as [custodian] [Substituted 'custodian of securities' by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).].

4. Application to conform to requirements.

- An application under regulation 3 which is not complete in all respects or which does not conform to the instructions specified therein shall be rejected:Provided that, before rejecting any such application, the Board shall give the applicant an opportunity to remove the objection, within such time as may be specified by the Board.

5. Furnishing of information, clarification, and personal representation.

(1)The Board may require the applicant to furnish such further information or clarification regarding matters relevant to the activities of a [custodian] [Substituted 'custodian of securities' by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).] for the purpose of consideration of the application.

(2)The applicant or his authorised representative shall, if so required, appear before the Board for personal representation, in connection with the grant of certificate.

6. Consideration of application for grant of certificate.

(1)For the purpose of the grant of a certificate the Board shall take into account all matters which are relevant to the activities of a [custodian] [Substituted 'custodian of securities' by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).] and in particular, whether:-

(a)the applicant fulfils the capital requirement in accordance with regulation 7;

(b)the applicant has the necessary infrastructure, including adequate office space, vaults for safe custody of securities and computer systems capability, required to effectively discharge his activities as [custodian] [Substituted 'custodian of securities' by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).];

(ba)[ the applicant has the requisite approvals under any law for the time being in force, in connection with providing custodial services in respect of [goods of a client or] [Inserted by Notification S.O No. 39(E), dated 12.1.2006 (w.e.f. 16.5.1996).] gold or gold related instruments of a mutual fund [or title deeds of a real estate assets held by a real estate mutual funds scheme] [Inserted by Notification No. 11/LC/GN/15/2008/130775, dated 4.7.2008 (w.e.f. 16.5.1996).], where applicable;]

(c)the applicant has in his employment adequate and competent persons who have the experience, capacity and ability of managing the business of the [custodian] [Substituted 'custodian of securities' by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).];

(d)the applicant has prepared a complete manual, setting out the systems and procedures to be followed by him for the effective and efficient discharge of his functions and the arms length relationships to be maintained with the other businesses, if any, of the applicant;

(e)the applicant is a person who has been refused a certificate by the Board or whose certificate has been cancelled by the Board;

(f)the applicant, his director, his principal officer or any of his employees is involved in any litigation connected with the securities market;

(g)the applicant, his director, his principal officer or any of his employees has at any time been convicted of any offence involving moral turpitude or of any economic offence;

(gg)[the applicant is a fit and proper person;] [Inserted by S.O. 17(E), dated 5.1.1998] and

(h)the grant of certificate is in the interest of investors.

(2)Notwithstanding anything contained in sub-regulation (1) the Board shall not consider an application made under regulation 3 unless the applicant is a body corporate.

7. Capital requirement.

(1)The capital requirement referred to in clause (a) of sub-regulation (1) of regulation 6 shall be a net worth of a minimum of rupees fifty crores.Explanation.- For the purposes of this regulation, the expression "net worth" means the paid-up capital and the free reserves as on the date of the application.

(2)Notwithstanding anything contained in sub-regulation (1) any [custodian] [Substituted 'custodian of securities' by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).] which:

(a)has been approved by the Board under the provisions of Securities and Exchange Board of India (Foreign Institutional Investors) Regulations, 1995, or the Government of India Guidelines for Foreign Institutional Investors dated September 14, 1992, even if it does not have the net worth specified in sub-regulation (1) may continue to function as a [custodian] [Substituted 'custodian of securities' by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).] and shall within a period of one year from the date of commencement of these regulations raise its net worth to that specified in sub-regulation (1);

[Provided that the period specified above may be extended by the Board upto a maximum of 5 years;] [Inserted by S.O. 851(E), dated 4.12.1996 (w.e.f. 16.5.1996).]

(b)has made an application under regulation 3 shall be permitted to fulfil his capital adequacy requirements within one month of the receipt of certificate under regulation 8.

8. Procedure and grant of certificate.

(1)After considering the application under regulation 3, with reference to the matters specified in regulation 6, if the Board on being satisfied that all particulars sought have been furnished and the applicant is eligible for the grant of a certificate, shall send an intimation of the same to the applicant.

(2)On receipt of an intimation from the Board under sub-regulation (1), the applicant shall pay to the Board a registration fee specified in Part A of Second Schedule in the manner specified in Part B thereof.

(3)The Board shall thereafter grant a certificate in Form B to the applicant on receipt of the registration fee.[Provided that the Board may restrict the certificate of registration to providing custodial services either in respect of securities or [goods of a client or] [Inserted by Notification S.O No. 39(E), dated 12.1.2006 (w.e.f. 16.5.1996).] in respect of gold or gold related instruments of a [mutual fund] [Substituted 'client' by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).] [or title deeds of real estate assets held by a real estate mutual fund scheme] [Inserted by Notification No. 11/LC/GN/15/2008/130775, dated 4.7.2008 (w.e.f. 16.5.1996).].

(4)A custodian of securities holding a certificate of registration as on the date of commencement of the Securities and Exchange Board of India (Custodian of Securities) (Amendment) Regulations, 2006 mayProvide custodial services in respect of gold or gold related instruments of a mutual fund only after taking prior approval of the Board.]

(5)[ A custodian of securities holding a certificate of registration as on the date of commencement of the Securities and Exchange Board of India (Custodian of Securities) (Amendment) Regulations, 2008 may provide custodial services in respect of title deeds of real estate assets held by a real estate mutual fund scheme.] [Inserted by Notification No. 11/LC/GN/15/2008/130775, dated 4.7.2008 (w.e.f. 16.5.1996).]

(6)[ A custodian holding a certificate of registration as on the date of commencement of the Securities and Exchange Board of India (Custodian of Securities) (Amendment) Regulations, 2018, may provide custodial services in respect of goods only after taking prior approval of the Board.] [Inserted by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).]

9. Conditions of certificate.

- The certificate granted to [custodian] [Substituted 'custodian of securities' by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).] shall be subject to the following conditions, namely:-

(a)it shall not commence any activities as [custodian] [Substituted 'custodian of securities' by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).] unless it fulfils the capital requirement specified in regulation 7;

(b)it shall abide by the provisions of the Act and these regulations in the discharge of its functions as [custodian] [Substituted 'custodian of securities' by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).];

(c)it shall enter into a valid agreement with its client for the purpose of providing custodial services;

(d)it shall pay annual fees as specified in Part A of the Second Schedule in the manner specified in Part B thereof;

(e)if any information previously submitted by it to the Board is found by it to be false or misleading in any material particular, or if there is any change in such information, it shall forthwith inform the Board in writing; and

(f)besides providing custodial services, it shall not carry on any activity other than activities relating to rendering of financial services.

9A. [ Period of validity. [Substituted by Notification SEBI/LAD-NRO/GN/2019/04, dated 22.3.2019 (16.5.1996).]

- Every certificate granted under sub-regulation (3) of regulation 8, shall be valid unless it is suspended or cancelled by the Board.]

9B. [ ***] [Omitted by Notification SEBI/LAD-NRO/GN/2019/04, dated 22.3.2019 (16.5.1996).]

9B. Renewal of certificate.- (1) A[custodian] [Substituted 'custodian of securities' by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).], desirous of having its certificate renewed shall make an application to the Board for renewal of the certificate in Form A, not less than three months before the expiry of its period of validity under regulation 9A.(2) The application for renewal of certificate shall be dealt with, as far as may be, as if it were an application for the grant of a fresh certificate under regulation 3 and shall be accompanied with the application fee as specified in Schedule II.]

10. Procedure where certificate is not granted.

(1)After considering an application for grant of certificate made under regulation 3, if the Board is satisfied that a certificate should not be granted, the Board may reject the application after giving the applicant a reasonable opportunity of being heard.

(2)The decision of the Board to reject the application shall be communicated within thirty days of such decision to the applicant in writing stating therein the grounds on which the application has been rejected.

(3)An applicant, who is aggrieved by the decision of the Board under subregulation (1) may, within a period of thirty days from the date of receipt of communication under sub-regulation (2), apply to the Board for re-consideration of its decision.

(4)The Board shall, as soon as possible, in the light of the submissions made in the application for reconsideration made under sub-regulation (3) and wherever necessary, after giving the applicant a reasonable opportunity of being heard, convey its decision in writing to the applicant.

11. Effect of refusal to grant certificate.

- Any [custodian] [Substituted 'custodian of securities' by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).] whose application for grant of certificate has been rejected by the Board shall, on and from the date of the receipt of the communication under sub-regulation (2) of regulation 10 cease to carry on any activity as [custodian] [Substituted 'custodian of securities' by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).] and shall be subject to the directions of the Board with regard to the transfer of records documents or securities that may be in its custody or control relating to its activity as [custodian] [Substituted 'custodian of securities' by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).].

Chapter III
General Obligations And Responsibilities Of Custodians

12. Code of conduct.

- Every [custodian] [Substituted 'custodian of securities' by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).] shall abide by the Code of Conduct as set out in the Third Schedule.

13. Segregation of activities.

- Where a [custodian] [Substituted 'custodian of securities' by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).] is carrying on any activity besides that of acting as [custodian] [Substituted 'custodian of securities' by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).], then,-

(i)the activities relating to his business as [custodian] [Substituted 'custodian of securities' by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).] shall be separate and segregated from all other activities;

(ii)its officers and employees engaged in providing custodial services shall not be engaged in any other activity carried on by him.

14. Monitoring, review evaluating and inspecting systems and controls.

(1)Every [custodian] [Substituted 'custodian of securities' by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).] shall have adequate mechanisms for the purposes of reviewing, monitoring and evaluating the custodian's controls, systems, procedures and safeguards.

(2)The [custodian] [Substituted 'custodian of securities' by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).] shall cause to be inspected annually the mechanism referred to in sub-regulation (1) by an expert and forward the inspection report to the Board within three months from the date of inspection.

15. Prohibition of assignment.

- No [custodian] [Substituted 'custodian of securities' by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).] shall assign or delegate its functions as a [custodian] [Substituted 'custodian of securities' by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).] to any other person unless such person is a [custodian] [Substituted 'custodian of securities' by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).]:[Provided that a [custodian] [Inserted by S.O. 1860 (E), dated 31.10.2006] may engage the services of a person not being a custodian, for the purpose of physical safekeeping of [goods or] [Inserted by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).] gold belonging to its client [including] [Substituted 'being' by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).] a mutual fund having a gold exchange traded fund scheme, subject to the following conditions -

(a)the [custodian] [Substituted 'custodian of securities' by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).] shall remain responsible in all respects to its client for safekeeping of the [goods or] [Inserted by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).] gold kept with such other person, including any associated risks;

(b)all books, documents and other records relating to the [goods or] [Inserted by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).] gold so kept with the other person shall be maintained in the premises of the custodian or if they are not so maintained, they shall be made available therein, if so required by the Board;

(c)the [custodian] [Substituted 'custodian of securities' by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).] shall continue to fulfill all duties to the clients relating to the [goods or] [Inserted by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).] gold so kept with the other person, except for its physical safekeeping.]

16. Separate custody account.

- Every [custodian] [Substituted 'custodian of securities' by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).] shall open a separate custody account for each client, in the name of the client whose securities are in its custody and the assets of one client shall not be mixed with those of another client.

17. Agreement with the client.

- Every [custodian] [Substituted 'custodian of securities' by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).] shall enter into an agreement with each client on whose behalf it is acting as [custodian] [Substituted 'custodian of securities' by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).] and every such agreement shall provide for the following matters namely: -

(a)the circumstances under which the [custodian] [Substituted 'custodian of securities' by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).] will accept or release securities [goods] [Inserted by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).], [assets or documents] [Inserted by Notification No. 11/LC/GN/15/2008/130775, dated 4.7.2008 (w.e.f. 16.5.1996).] from the custody account;

(b)the circumstances under which the [custodian] [Substituted 'custodian of securities' by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).] will accept or release monies from the custody account;

(c)the circumstances under which the [custodian] [Substituted 'custodian of securities' by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).] will receive rights or entitlements on the securities [or goods] [Inserted by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).] of the client;

(d)the circumstances and the manner of registration of securities in respect of each client; and

(e)details of the insurance, if any, to be provided for by the [custodian] [Substituted 'custodian of securities' by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).].

18. Internal controls.

(1)Every [custodian] [Substituted 'custodian of securities' by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).] shall have adequate internal controls to prevent any manipulation of records and documents including audits for securities [goods] [Inserted by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).] and rights or entitlements arising from the securities [and goods] [Inserted by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).] held by it on behalf of its client.

(2)Every [custodian] [Substituted 'custodian of securities' by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).] shall have appropriate safekeeping measures to ensure that such securities [goods] [Inserted by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).], [assets or documents] [Inserted by Notification No. 11/LC/GN/15/2008/130775, dated 4.7.2008 (w.e.f. 16.5.1996).] are protected from theft and natural hazard.

19. Maintenance of records and documents and furnishing of information.

(1)Without prejudice to the provisions of any other law for the time being in force every [custodian] [Substituted 'custodian of securities' by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).] shall maintain the following records and documents, namely -

(a)records containing details of securities [goods] [Inserted by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).],[assets or documents] [Inserted by Notification No. 11/LC/GN/15/2008/130775, dated 4.7.2008 (w.e.f. 16.5.1996).] received and released on behalf of each client;

(b)records containing details of monies received and released on behalf of each client;

(c)records containing details of rights or entitlements of each client arising from the securities held on behalf of the client;

(d)records containing details of registration of securities in respect of each client;

(e)ledger for each client;

(f)records containing details of instructions received from and sent to clients;

(g)records of all reports submitted to the Board.

(2)Every [custodian] [Substituted 'custodian of securities' by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).] shall intimate to the Board the place where the records and documents under sub-regulation (1) are maintained.

(3)Every [custodian] [Substituted 'custodian of securities' by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).] shall preserve the records and documents maintained under sub-regulation (1) for a minimum period of five years.

20. Information to the Board.

(1)The Board may, at any time, call for any information from a [custodian] [Substituted 'custodian of securities' by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).] with respect to any matter relating to its activity as [custodian] [Substituted 'custodian of securities' by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).].

(2)Where any information is called for by the Board under sub-regulation (1), it shall be the duly of the [custodian] [Substituted 'custodian of securities' by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).] to furnish such information within such reasonable period as the Board may specify.

Chapter IV
Inspection And Audit

21. Board's right to inspect.

(1)The Board may appoint one or more persons as inspecting officer to undertake inspection of the hooks of account, records and documents of the [custodian] [Substituted 'custodian of securities' by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).] for any of the following purposes, namely-

(a)to ensure that the books of account, records and documents are being maintained by the [custodian] [Substituted 'custodian of securities' by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).] in the manner specified in these regulations;

(b)to investigate into complaints received from investors, clients or any other person, on any matter having a bearing on the activities of the [custodian] [Substituted 'custodian of securities' by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).];

(c)to ascertain whether the provisions of the Act and these regulations are being complied with by the [custodian] [Substituted 'custodian of securities' by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).]; and

(d)to investigate suo motu into the affairs of the [custodian] [Substituted 'custodian of securities' by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).] in the interest of the securities market or in the interest of investors.

22. Notice before inspection.

(1)Before ordering an inspection under regulation 21 the Board shall give not less than ten days notice to the [custodian] [Substituted 'custodian of securities' by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).].

(2)Notwithstanding anything contained in sub-regulation (1), where the Board is satisfied that in the interest of the investors no such notice should be given, it may by an order in writing direct that the inspection of the affairs of the [custodian] [Substituted 'custodian of securities' by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).] be taken up without such notice.

(3)During the course of an inspection, the [custodian] [Substituted 'custodian of securities' by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).] against whom the inspection is being carried out shall be bound to discharge his obligations as provided in regulation 23.

23. Obligations of custodian on inspection by the Board.

(1)It shall be the duty of the [custodian] [Substituted 'custodian of securities' by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).] whose affairs are being inspected, and of every director, officer and employee thereof to produce to the inspecting officer such books, securities, accounts, records and other documents in its custody or control and furnish him with such statements and information relating to his activities of the [custodian] [Substituted 'custodian of securities' by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).], as the inspecting officer may require, within such reasonable period as the inspecting officer may specify.

(2)The [custodian] [Substituted 'custodian of securities' by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).] shall allow the inspecting officer to have reasonable access to the premises occupied by such custodian or by any other person on his behalf and also extend reasonable facility for examining any books, records, documents and computer data in the possession of the [custodian] [Substituted 'custodian of securities' by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).] or such other person and also provide copies of documents or other materials which in the opinion of the inspecting officer are relevant for the purposes of the inspection.

(3)The inspecting officer, in the course of inspection, shall be entitled to examine or to record the statements of any director, officer or employee of the [custodian] [Substituted 'custodian of securities' by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).].

(4)It shall be the duty of every director, officer or employee of the [custodian] [Substituted 'custodian of securities' by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).] to give to the inspecting officer all assistance in connection with the inspection, which the inspecting officer may reasonably require.

24. Submission of report to the Board.

- The inspecting officer shall, as soon as possible, on completion of the inspection submit an inspection report to the Board:Provided that if directed to do so by the Board, he may submit an interim report.

25. Communication of findings etc. to the [custodian] [Substituted 'custodian of securities' by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).] of securities.

- The Board shall, after consideration of the inspection report or the interim report referred to in regulation 24, communicate the findings of the inspection officer to the [custodian] [Substituted 'custodian of securities' by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).] and give him an opportunity of being heard.

(2)On receipt of the reply if any, from the [custodian] [Substituted 'custodian of securities' by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).], the Board may call upon the [custodian] [Substituted 'custodian of securities' by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).] to take such measures as the Board may deem fit in the interest of the securities market and for due compliance with the provisions of the Act, the rules framed thereunder and these regulations.

Chapter V
Procedure Eor Action In Case Of Default

26. Suspension of certificate.

- The Board may suspend the certificate granted to a [custodian] [Substituted 'custodian of securities' by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).] where the [custodian] [Substituted 'custodian of securities' by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).]:

(a)contravenes any of the provisions of the Act, the rules framed thereunder or these regulations;

(b)fails to furnish any information relating to his activity as [custodian] [Substituted 'custodian of securities' by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).] as required by the Board;

(c)furnishes to the Board information which is false and misleading in any material particular;

(d)does not submit periodic returns or reports as required by the Board;

(e)does not co-operate in any enquiry or inspection conducted by the Board;

(f)fails to update its systems and procedures as recommended by the Board;

(g)fails to resolve the complaints of clients or fails to give a satisfactory reply to the Board in this behalf;

(h)is guilty of misconduct or makes a breach of the Code of Conduct specified in the Third Schedule;

(i)fails to pay annual fees."

(h)is guilty of misconduct or makes a breach of the Code of Conduct specified in the Third Schedule;

(i)fails to pay annual fees.

27. Cancellation of certificate.

- The Board may cancel the certificate granted to a [custodian] [Substituted 'custodian of securities' by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).]:

(a)when it is guilty of fraud or has been convicted of an offence involving moral turpitude; or

(b)it has been guilty of repeated defaults of the nature specified in regulation 26

Explanation.- In this regulation, "fraud" has the same meaning as is assigned to it in section 17 of the Indian Contract Act, 1872. (9 of 1872)

28. Manner of making order of cancellation or suspension.

- No order of suspension or cancellation of certificate shall be made by the Board against a [custodian] [Substituted 'custodian of securities' by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).], except after holding an enquiry in accordance with the procedure specified in regulation 29.

29. Manner of holding enquiry before suspension or cancellation.

(1)For the purpose of holding an enquiry under regulation 28, the Board may appoint one or more enquiry officer.

(2)The enquiry officer shall issue to the [custodian] [Substituted 'custodian of securities' by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).], at its registered office or its principal place of business, a notice setting out the grounds on which action is proposed to be taken against it and calling upon it to show cause against such action within a period of fourteen days from the date of receipt of the notice.

(3)The [custodian] [Substituted 'custodian of securities' by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).] may, within fourteen days from the date of receipt of such notice, furnish to the enquiry officer a written reply, together with copies of documentary or other evidence relied on by it or sought by the Board from the [custodian] [Substituted 'custodian of securities' by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).].

(4)The enquiry officer shall give a reasonable opportunity of hearing to the [custodian] [Substituted 'custodian of securities' by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).] to enable him to make submissions in support of its reply made under sub-regulation (3).

(5)Before the enquiry officer, the [custodian] [Substituted 'custodian of securities' by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).] may either appear in person or through any person duly authorised by the [custodian] [Substituted 'custodian of securities' by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).]; Provided that no lawyer or advocate shall be permitted to represent the [custodian] [Substituted 'custodian of securities' by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).] at the enquiry;Provided further that where a lawyer or an advocate has been appointed by the Board as a presenting officer under sub-regulation (6), it shall be lawful for the [custodian] [Substituted 'custodian of securities' by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).] to present its case through a lawyer or advocate.

(6)The enquiry officer may, if he considers it necessary, ask the Board to appoint a presenting officer to present its case.

(7)The enquiry officer shall, after taking into account all relevant facts and submissions made by the [custodian] [Substituted 'custodian of securities' by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).], submit a report to the Board and recommend the penal action, if any, to be taken against the [custodian] [Substituted 'custodian of securities' by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).] as also the grounds on which the proposed action is justified.

30. Show-cause notice and order.

(1)On receipt of the report from the enquiry officer, the Board shall consider the same and issue to the [custodian] [Substituted 'custodian of securities' by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).] a show-cause notice as to why the penal action as proposed by the enquiry officer should not be taken against it.

2. The [custodian] [Substituted 'custodian of securities' by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).] shall, within fourteen days of the date of the receipt of the show-cause notice, send a reply to the Board.

3. The Board, after considering the reply of the [custodian] [Substituted 'custodian of securities' by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).] to the show-cause notice, if received within a period of fourteen days shall, as soon as possible but not later than thirty days from the receipt of the reply or the date of hearing, if any, whichever is later, pass such order as it deems fit, including an order for the suspension or cancellation of the certificate.

(4)Every order made under sub-regulation (3) shall be self-contained and shall give reasons for the conclusions stated therein, including the justification for the penalty if any, imposed by that order.

31. Effect of suspension and cancellation of certificate.

(1)On and from the date of the suspension of the certificate, the [custodian] [Substituted 'custodian of securities' by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).] shall cease to carry on any activity as a [custodian] [Substituted 'custodian of securities' by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).] during the period of suspension, and shall be subject to the directions of the Board with regard to any records, documents or securities that may be in its custody or control, relating to its activities as [custodian] [Substituted 'custodian of securities' by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).].

(2)On and from the date of cancellation of the certificate, the [custodian] [Substituted 'custodian of securities' by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).] shall, with immediate effect, cease to carry on any activity as a [custodian] [Substituted 'custodian of securities' by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).], and shall be subject to the directions of the Board with regard to any records, documents or securities that may be in its custody or control, relating to its activities as [custodian] [Substituted 'custodian of securities' by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).].

32. Publication of order of suspension or cancellation.

-The order of suspension or cancellation of certificate passed under sub-regulation (3) of Regulation 30 shall be published by the Board in at least two daily newspapers.FIRST SCHEDULE-FORMS[See regulation 2(h)]FORM ASECURITIES AND EXCHANGE BOARD OF INDIA [custodian] [Substituted 'custodian of securities' by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).] REGULATIONS, 1996(See Regulation 3(3))APPLICATION FOR GRANT OF CERTIFICATE OF REGISTRATION AS [custodian] [Substituted 'custodian of securities' by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).]SECURITIES AND EXCHANGE BOARD OF INDIA MITTAL COURT, 'B' WING, 1ST FLOOR NARIMAN POINT, MUMBAI 400021 - INDIAINSTRUCTIONS:i. This form is meant for use by the applicant for application for grant of certificate of registration as [custodian] [Substituted 'custodian of securities' by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).].ii. The applicant should complete this form, and submit it, along with all supporting documents to the Board at its head office at Mumbai.iii. This application form should be filled in accordance with the SEBI [custodian] [Substituted 'custodian of securities' by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).] Regulations, 1996.iv. The application will be considered by the Board provided it is complete in all respects.v. All answers must be typed.vi. Information which needs to be supplied in more detail may be given on separate sheets which should be attached to the application form.vii. The application must be signed and all signatures must be original.viii. The application must be accompanied by an application fee as specified in the Second Schedule to the SEBI [custodian] [Substituted 'custodian of securities' by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).] Regulations, 1996.ix. Every page of the form and every additional sheet must be initialled by the authorised signatory of the applicant.x. All copies of documents should be attested as true by an authorised notary.

1. Name, address of the registered office, address for correspondence, telephone number(s), fax number(s), telex number(s) of the applicant and the name of the contact person.

2. Please indicate to which of the following categories the applicant belongs:

(i)Foreign bank

(ii)Domestic bank

(iii)Financial Institution

(iv)Other

3. (a) Date and place of incorporation or establishment and date of commencement of business (enclose certificate of incorporation, memorandum and articles of association or statutory provisions, if any, under which incorporated or established).

(b)Details of the activities carried on by the applicant, in India or overseas.

(c)Details of affiliates and subsidiaries of the applicant operating in India, and activities carried on by them.

(d)Details of registration with the Securities and Exchange Board of India or with the Reserve Bank of India or with any regulatory authority overseas of the applicant, and of its affiliates and subsidiaries operating in India.

(e)In case the applicant is buying, selling or otherwise dealing with the securities market as a [custodian] [Substituted 'custodian of securities' by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).] immediately before the 24th March, 1995.

(i)Date of commencement of business as [custodian] [Substituted 'custodian of securities' by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).] in case of banks, please enclose copies of the Reserve Bank of India's permission, and if applicable, copies of approval from the Central Government, to carry on activities as [custodian] [Substituted 'custodian of securities' by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).].

(ii)Type and number of existing clients (Financial Institutions, Mutual Funds, Foreign Institutional Investors, Depository Receipts, Portfolio Managers, Non Banking Finance Companies, Stock Brokers, Corporates, Individuals.)

(iii)Volume of assets under custody.

4. Please state whether the applicant, director or principal officer is involved in any litigation connected with the securities market which has an adverse bearing on the business of the applicant; or has at any time been convicted for any moral turpitude or at anytime has been found guilty of any economic offence.

5. Please also state whether there has been any instance of violation or nonadherence to the securities laws, code of ethics/conduct, code of business rules, for which the applicant, or its parent or holding company or affiliate may have been subject to economic, or criminal, liability, or suspended from carrying out its operations, or the registration revoked temporarily.

6. Please indicate the net worth and paid-up capital in Rupees as per the latest audited financial statements of the applicant (enclose copy).

7. Please indicate services that are provided to clients or are proposed to be provided to clients as [custodian] [Substituted 'custodian of securities' by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).].

8. Please provide the following details regarding infrastructure:

(i)space owned in square feet (please indicate location and enclose copy of title);

(ii)space on lease in square feet (please indicate location and enclose copy of lease agreement);

(iii)space on rent in square feet (please indicate location and enclose copy of rental agreement);

(iv)[ details of vault or warehouse, for each vault or warehouse (in case the vault or warehouse is built to any specific standard, give details and documentary evidence thereof).] [Substituted by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).]

9. Please provide the following details regarding staff involved in activities as [custodian] [Substituted 'custodian of securities' by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).]:

(i)organisation structure;

(ii)experience and background of key personnel.

10. Please provide the following details regarding safekeeping and security systems and procedures:

(i)[warehouse] [Inserted by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).] vault security and access control systems;

(ii)systems for tracking securities [and goods] [Inserted by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).];

(iii)risk control and operations manuals (enclose copies);

(iv)give details of independent internal control mechanisms for monitoring, evaluation and review of accounting safekeeping and reporting systems and procedures.

11. Please provide the following details regarding automatic data processing

systems and record keeping:

(i)details of hardware, software and communications systems, their capability, function and location;

(ii)details of data storage and back up procedures and sites, their capability, function and location;

(iii)details of disaster recovery systems and procedures.

12. Declaration statement (to be given as below)

We hereby agree and declare that the information supplied in the application, including the attachment sheets, is complete and true.We further agree that, we shall notify the Securities and Exchange Board of India immediately any change in the information provided in the application.We further agree that we shall comply with, and be bound by the Securities and Exchange Board of India Act, 1992, and the Securities and Exchange Board of India [custodian] [Substituted 'custodian of securities' by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).] Regulations, 1996, and such other guidelines/instructions as may be announced by the Securities and Exchange Board of India from time to time.We further agree that as a condition of registration, we shall abide by such operational instructions/directives as may be issued by the Securities and Exchange Board of India from time to time.For and on behalf of ............(Name of the applicant)Authorised signatory .................Date:.............Place :.............FORM B(See regulation 8)Securities And Exchange Board Of India [custodian] [Substituted 'custodian of securities' by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).] Regulations, 1996Certificate Of Registration As [custodian] [Substituted 'custodian of securities' by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).]I. In exercise of the powers conferred by sub-section (1) of section 12 of the Securities and Exchange Board of India Act, 1992 (15 of 1992), read with the regulations made thereunder, the Board hereby grants a certificate of registration to ________________ as a [custodian] [Substituted 'custodian of securities' by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).] subject to the conditions specified in the Act and in the regulations made thereunder.II. The Registration Number of the [custodian] [Substituted 'custodian of securities' by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).] is IN/Date :Place : MumbaiBy orderSd/-For and on behalf ofSecurities and Exchange Board of IndiaSecond Schedule[See regulation [3(3) and 8] [Substituted '3(3), 8 and 9(C)' by Notification No. SEBI/LAD-NRO/GN/2019/04, dated 22.3.2019 (w.e.f. 16.5.1996).]]Securities and Exchange Board of India [custodian] [Substituted 'custodian of securities' by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).] Regulations, 1996Fees Payable Under The Regulations[PART A [Substitued by S.O. 1860(E), dated 31.10.2006]Amount to be paid as fees

(i) Application fee Rs.	1,00,000
(ii) Registration fee Rs.	15,00,000
(iii) Annual fee Rs.	10,00,000 or[0.0005 per cent] [Substitued by Notification No. F.No. 11/LC/GN/2008/21669, dated 31.3.2008]of the "assets under custody" of the[custodian] [Substituted 'custodian of securities' by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).], whichever is higher.

Explanation I. - For the purpose of this part, the expression "assets under custody" shall mean the value of the assets held by the [custodian] as disclosed by him under sub-paragraph (4) of paragraph II.[***] [Omitted 'Explanation II' by Notification No. SEBI/LAD-NRO/GN/2019/04, dated 22.3.2019 (w.e.f. 16.5.1996).]]

Part B

I. The fees specified above shall be payable by demand draft or bankerscheque in favour of "The Securities and Exchange Board of India" at Mumbai.[II. Payment of annual fee.-(1) On and from the commencement of the Securities and Exchange Board of India [custodian] [Substitued by S.O. 1860(E), dated 31.8.2006] (Second Amendment) Regulations, 2006, the annual fee shall be payable with reference to each financial year, within one month of completion of the financial year.

(2)A [custodian] [Substituted 'custodian of securities' by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).] who is granted registration on and after the commencement of the Securities and Exchange Board of India [custodian] [Substituted 'custodian of securities' by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).] (Second Amendment) Regulations, 2006, shall pay proportionate annual fee in respect of the financial year in which he was granted registration and full annual fee for every subsequent financial year during which the registration subsists.

(3)A [custodian] [Substituted 'custodian of securities' by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).] who is granted registration before the commencement of the Securities and Exchange Board of India [custodian] [Substituted 'custodian of securities' by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).] (Second Amendment) Regulations, 2006, shall pay proportionate annual fee in respect of the financial year of such commencement and full annual fee for every subsequent financial year during which the registration subsists.Provided that any annual fee paid by a [custodian] [Substituted 'custodian of securities' by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).] before the commencement of the Securities and Exchange Board of India [custodian] [Substituted 'custodian of securities' by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).] (Second Amendment) Regulations, 2006, in respect of a period, the whole or part of which falls after such commencement, shall be proportionately adjusted against the amount payable under this subparagraph.

(4)The payment of annual fee shall be accompanied by a statement of assets under custody which shall be in such format as may be specified by the Board and shall be certified to be true and complete by the functional head of the custody services of the [custodian] [Substituted 'custodian of securities' by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).].]THIRD SCHEDULE(See regulation 12)Securities And Exchange Board Of India [custodian] [Substituted 'custodian of securities' by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).] Regulations, 1996Code of conduct

1. The [custodian] [Substituted 'custodian of securities' by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).] shall maintain the highest standard of integrity, fairness and professionalism in the discharge of his duties.

2. The [custodian] [Substituted 'custodian of securities' by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).] shall be prompt in distributing dividends, interest or any such accruals of income received or collected by him on behalf of his clients on the securities held in custody.

3. The [custodian] [Substituted 'custodian of securities' by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).] shall be continuously accountable for the movement of securities [or goods] [Inserted by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).] in and out of [the] [Inserted by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).] custody account, deposit, and withdrawal of cash from the client's account and shall provide complete audit trail, whenever called for by the client or [Board] [Substituted 'Securities and Exchange Board of India' by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).].

4. The [custodian] [Substituted 'custodian of securities' by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).] shall establish and maintain adequate infrastructural facility to be able to discharge custodial services to the satisfaction of clients, and the operating procedures and systems of the [custodian] [Substituted 'custodian of securities' by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).] shall be well documented and backed by operations manuals.

5. The [custodian] [Substituted 'custodian of securities' by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).] shall maintain client confidentiality in respect of the client's affairs.

6. Where custodian records are kept electronically, the [custodian] [Substituted 'custodian of securities' by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).] shall take precautions necessary to ensure that continuity in record keeping is not lost or destroyed and that sufficient back up of records is available.

7. The [custodian] [Substituted 'custodian of securities' by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).] shall create and maintain the records of securities held in custody in such manner that the tracing of securities or obtaining duplicate title documents is facilitated, in the event of loss of original records for any reason.

8. The [custodian] [Substituted 'custodian of securities' by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).] shall extend to other custodial entities, depositories and clearing organizations all such co-operation that is necessary for the conduct of business in the areas of inter custodial settlements, transfer of securities and transfer of funds.

9. The [custodian] [Substituted 'custodian of securities' by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).] shall ensure that an arms length relationship is maintained, both in terms of staff and systems, from his other businesses.

10. Every [custodian] [Substituted 'custodian of securities' by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).] shall exercise due diligence in safe-keeping and administration of the assets of his clients in his custody for which he is acting as [custodian] [Substituted 'custodian of securities' by Notification No. SEBI/LAD-NRO/GN/2019/01, dated 1.1.2019 (w.e.f. 16.5.1996).].

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