Surveillance Policy

A DP sits close to millions of client transactions every day. Some of those transactions look wrong — a sudden, unexplained flurry of transfers, say. Someone has to be watching for that pattern, and it has to be the DP itself, not just the regulator after the fact.

NSDL requires every DP to build its own Surveillance Policy: a set of internal rules, tuned to that DP's own kind of business, its client mix and how many transactions it actually processes, that throws up alerts worth looking at.

From Chapter 3 (the DP's ongoing obligations): NSDL has advised its DPs to put in place a Surveillance Policy based on the nature of their depository business, type of clients, number of transactions etc., to generate appropriate surveillance alerts at their end, enabling them to effectively monitor client transactions as laid down in that policy.

This sits among the DP's other ongoing obligations in the same chapter: a half-yearly internal audit by a practicing chartered accountant, company secretary or cost accountant; a daily, end-of-day reconciliation with the depository; and periodic returns to SEBI and the depository — for example, a monthly Investor Grievance Report due by the 10th of the following month.

Bhavani Securities, a DP with 12,000 retail clients, builds a Surveillance Policy that flags any client account showing more than 20 off-market debit instructions in a single week — a pattern unusual for its typical retail client.

When one client's account crosses that threshold, generating 27 off-market debits in seven days, the policy's alert fires, and Bhavani's compliance team reviews the account before processing any further instruction — exactly the kind of monitoring NSDL's surveillance advisory is meant to produce.

Chapter 3, in the block of a DP's ongoing obligations alongside internal audit, reconciliation and periodic returns. Expect Surveillance Policy tested as an NSDL advisory tied to each DP's own business profile, distinct from the statutory audit and reconciliation obligations sitting right next to it.

• A Surveillance Policy is calibrated to each DP's own business, client type and transaction volume — the workbook gives no single fixed threshold every DP must use.
• Do not confuse it with the half-yearly internal audit or the daily EOD reconciliation — three separate DP obligations sitting in the same part of the chapter.