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  • IBA Forensic Auditors  ​

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As per Exchange Requirement - Auditor and/or its employee or partner signing the Internal Audit Report shall have a valid NISM Series-XIV: Internal Auditors for Stockbrokers Certification or NISM Series III-A: Securities Intermediaries Compliance Certification or ICAI Certificate Course on Financial Markets and Securities Laws or any other equivalent examination.

​All the stock brokers and clearing members, who have transacted or cleared even a single trade during the period of audit, are required to conduct the internal audit. It is applicable for Capital Market, Derivatives (F&O and CDS) and WDM segment of the Exchange. Members shall conduct Internal audit on a half yearly basis. For half year ending March 31st, audit reports along with management comments are required to be submitted by June 30th and for half year ending September 30th, same is required to be submitted by December 31st through ENIT only.

Our Partner Abhinav Rajvanshi is NISM Series III-A: Securities Intermediaries Compliance Certified Auditor and a Chartered Accountant.

Internal Audits of Depository Participant

NISM Series VI: Depository Operations Certification Examination 

NISM Series III A: Securities Intermediaries Compliance (Non-Fund) Certification 

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xi) Modification in the name of client (including minor correction in name)
xii) Client data modifications
xiii) Accreditation of investors (IGP)
xiv) Freezes due to statutory orders (freeze reason codes 15 to 33)
xv) Pledge & Hypothecation (w.e.f October 1, 2020)
xvi) Margin Pledge / Re-Pledge
xvii) Online account closure by client
xviii) Execution of Electronic/ E DIS

As per NSDL Circular NSDL/POLICY/2023/0048 dated April 01, 2023 for Internal Audit and Concurrent Audit of depository operations a Chartered Accountant firm is required to conduct an audit, the copy of such report is to be submitted to NSDL on half yearly basis. As per Bye Law 10.3 of NSDL, each Depository Participant is required to have its depository operations audited by a qualified Chartered Accountant holding certificate of practice. 

​All the DP Depository Participants may get the audits done and are required to submit the audit report as per schedule given below to NSDL.

​​- April 01 to September 30 : November 15

​​- October 01 to March 31  :  May 15 

Participants may appoint same auditor for concurrent and internal audit. If both audits are done by same auditor, then a consolidated report must be submitted instead of two separate reports. If both audits are being done by different auditors, then two separate reports must be submitted.

Any one person conducting the internal and/or concurrent audit (risk prone areas) should obtain certification from the National Institute of Securities Markets (NISM) by passing the NISM- Series-VI: Depository Operations Certification Examination DOCE). Our Partner Abhinav Rajvanshi is a Chartered Accountant and certified Series- VI : Depository Operations Certified. Our Firm Rajvanshi & Associates is eligible to conduct Internal and Concurrent Audits of Depository Participant in line with requirement of NSDL for all those depository participants registered with NSDL.

Audit work for areas which are covered under the scope of concurrent audit should be completed by next working day. If audit cannot be completed by next working day due to large volume, it must be completed within a week. Concurrent audit includes following areas:

i) Account opening,
ii) Delivery Instruction Slip (DIS) book issuance,
iii) Execution of DIS.
iv) Power of Attorney modifications,
v) Account closure requests initiated by Participant,
vi) Investor grievances received by Participant,
vii) Providing Transaction Statements to clearing members (process level)
viii) KYC reconfirmation intimated by NSDL and initiated by Participant,
ix) Replacement of Original DIS image in tamper proof storage
x) Non Disposal Undertakings (NDU)

Scope for Audit of Depository Services

1. To check whether account opening formalities are properly complied as per KYC norms.

2. Demat request are sent within 7 days of receipt.

3. Delivery instructions are entered correctly and stamped by branch officials on receipt.

4. Checking whether Delivery instruction issue register is maintained and updated on receipt of instruction.

5. Checking whether pledge/hypothecation and release followed systematically.

6. To ensure that there are no revenue leakages.

7. To ensure that all procedures & guidelines have been followed as per NSDL.

8. Adherence to all requirements and guidelines as mentioned in the NSDL Circular No.NSDL/POLICY/2014/0101

9. Certification/Verification of KYC compliance of DEMAT accounts as and when required by NSDL.

10. Whether KYC documents given by the existing holder are updated & uploaded in the KRA package.

11. Adherence to all requirements and guidelines as per NSDL policy /2014/0093.

Checklist: A. Account Opening / KYC Documents

• Account Opening forms

• KYC Documents

• PAN Verification

• In-person verification

• Updating & uploading of documents in the KRA package

• Proof of Identity (POI)

• Proof of Address

• Correspondence Address

• Authorized Signatories

• SMS flagging and mobile/ tel. No on record.

• Completeness / Validation of data entered into DPM with data provided in the Account Opening forms

• Minor BO / Joint / HUF accounts

• Account Activation

• Nomination

• Any other area as may be required.

B. Basic Service Demat Account (BSDA)

• Procedures and Checks pertaining to BSDA

C. Client Data Modification (CDM)

D. Demat / Remat / Conversion /Reconversion request

• Procedure for receiving/processing requests pertaining to Demat / Remat / Conversion /Reconversion request

• Procedure for forwarding requests pertaining to Demat / Remat / Conversion /Reconversion request to RTA / issuer (.i.e. Demat request are sent within 7 days of receipt)

• Arrangement for Safekeeping of Security / Share Certificates

• Tracking of demat requests

• Checks pertaining to processing of Demat / Remat / Conversion / Reconversion request

• Demat and Remat request rejection status and reasons for rejection.

E. Delivery Instruction Slip (DIS)

• Issuance of DIS

• Inventory Control of DIS

• Entry of DIS in system.

• Time Stamping and Officers initials on DIS

• Completeness of DIS

• Delivery instruction issue register is maintained and updated on receipt of instruction.

• Procedure for Verification of DIS

• Signature Verification

• Corrections / Cancellations to DIS

• Blocking of used / executed / lost / misplaced / Stolen DIS

• Procedure for processing of DIS

F. Transaction and Transaction Statement (TS)

• Checks pertaining to setting up / processing of transactions

• Future dated transactions

• Validation of TS

• Maintenance of records of TS

G. Transmission and Account transfers

• Procedures followed for account transfers and transmission.

• Checks pertaining to account transfer and transmission

H. Compliance under Prevention of Money Laundering Act, 2002 (PMLA)

• Suspicious transaction monitoring, reporting and record keeping

• Appointment of Principal officer as per PMLA Act 2002.

I. Freeze / Unfreeze

• Freeze facility

• Procedure followed for Freeze

• Checks pertaining to freeze

• Any other area as may be specified by the depository

J. Pledge / Hypothecation

• Checks and procedures for pledging and unpledging are followed

K. Information Technology Areas

• Logical and physical restrictions to access data and records

• IT Security

• Regular Backup and Keors DMS Backup

• Maintaining backup at remote location

L. Miscellaneous areas

• Periodic drills that simulate the real life disaster scenarios on a regular basis.

• Investor Grievance and redressal of complaints

• Percentage of complaints pending and resolved

• Submission of Internal Audit / Concurrent Audit / Net worth Certificate

• Submission of Annual Financial Statement

• Checking of Previous Compliance to internal and concurrent audit report and also checking compliance level of previous inspection observations/ directions of regulatory bodies

• Manipulation / Unauthorized Action

• Charges

• Improper Service

• Maintenance of records, documents, circulars and Guidelines issued by SEBI and NSDL.

• Ensure that all procedures & guidelines have been followed as per NSDL

• Submission of Compliance Certificate (half yearly) to NSDL

• Submission of Charge structure to NSDL by 30th April every year.

• Other adverse findings.

M. Quality of Management

• Experience, Fit and Proper and Qualification of Key Personnel.

• Training and development of employees.

• Adequacy of staff strength.

N. Profit Position.

• Financial Status / profitability of DPs

• The net-worth of the DPs (whether reducing or increasing from previous years)

• Net Profits of DPs operations.

• Cases of any revenue leakages.

Internal Audits of Stock Broker and Depository Participant