Guidelines for Custodians

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....r a subsidiary/associate/joint venture of such banking company may render such financial services subject to conditions as may be specified by the Board." In this regard, the following is specified - 2.1.1. The list of activities relating to rendering of financial services that can be carried out by a Custodian, in terms of the certificate granted under the Custodian Regulations shall be specified through the Custodians and DDPs Standards Setting Forum ('CDSSF'), in consultation with SEBI. 2.1.2. Custodian (except which is a Bank or a subsidiary / associate / joint venture of a Bank) shall undertake financial services activities falling under the purview of SEBI and those outside the purview of SEBI through separate Strategic Business Units (SBU) respectively. The following safeguards shall be put in place by such Custodian: i. Separate accounts shall be prepared and maintained for the SBUs on arms-length basis; ii. Net worth criteria for Custodian shall be satisfied after excluding the books of the SBU. [In terms of Regulation 7(1) of SEBI (Custodian) Regulations, 1996, Custodian shall fulfill the net worth requirements under Custodian Regulations, separ....

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....the requirement of having vault. Subject to full disclosure and taking informed consent from client, physical securities may be held in the vault/safe or equivalent storage with features that may be harmoniously adopted by the industry through the CDSSF, in consultation with SEBI. 4.2.3. Custodian shall submit the specifications of its vault along with its size as part of its quarterly report. 5. Obligations and Responsibilities In order to further strengthen the compliance and governance framework for Custodians, SEBI vide Gazette notification dated September 18, 2025, inter alia, inserted Regulation 19B in the Custodian Regulations, mandating certain obligations and responsibilities. Accordingly, the following are specified: 5.1. Governance structure and processes: Governance structure 5.1.1. Custodian shall have committees of Board of Directors (BoD) or analogous body or committee appointed/delegated by such body, such as Audit Committee, Nomination and Remuneration Committee (as applicable), Risk Management Committee or equivalent thereof and any other Committee as mandated by SEBI from time to time. 5.1.2. Custodian which is a bank or subsidiary/ associate....

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....operational risk, legal risk, risks such as mis-utilization of clients' sensitive information, etc., after taking inputs from Risk Management Committee. 5.2.2. Custodian may, however, rely on entity/group level risk management policy that cover the relevant risks pertaining to custody operations. 5.2.3. Such risk management policy shall: i. strive to address the root cause of the risks and try to prevent recurrence of such risks; ii. enable early identification and prevention of risk; iii. assess the likely impact of a probable risk event on various aspects of the functioning of the Custodian such as impact on clients, impact on other stakeholders in the market, financial loss to the Custodian, reputational loss etc. and lay down measures to minimize the impact of such event. 5.2.4. The risk management framework shall have measures for Suspicious Transaction Reporting (STR) to Financial Intelligence Unit (FIU) and monitoring alerts from the Depositories. Ensuring Integrity of Operations 5.2.5. Custodian shall maintain adequate human resources, systems, processes and procedures for seamless running of operations and protection of investor da....

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....h policy shall be reviewed on yearly basis or within three months of material change to minimize the incidents affecting business continuity. 5.5.2. Custodian shall develop and document mechanisms and standard operating procedures (SOP) to recover operations from Disaster Recovery Site (DRS) of Custodian. A suitable framework shall be put in place to constantly monitor health and performance of critical custody systems in the normal course of business. 5.5.3. The BoD or analogous body or committee appointed/delegated by such body of the Custodian shall review the implementation of the BCP and SOP on Disaster Recovery (DR) on atleast yearly basis or on ad-hoc basis in case of material changes. 5.5.4. The DRS for custody systems shall preferably be set up in different seismic zones. In case, due to any reasons like operational constraints, such a geographic separation is not possible, then the Primary Data Centre (PDC) and DRS shall be separated from each other by a distance of at least 250 kilometers, or the DRS shall be designed and constructed to meet the resilience requirements of a higher seismic zone vis-a-vis the PDC, to ensure that both of them do not get affected by....