The following procedure should be adopted for identification of Client:

– As far as possible, no clients will be registered without personal contact.
– In addition to personal contact, for client identification, proper address and identity proof as prescribed by SEBI as per Uniform Documentary Requirement will be obtained from the client.
– PAN number and a Copy of PAN card will be compulsorily obtained from the client. No trading will be allowed unless the proof of PAN proof is submitted by the client.
– All the documents collected will be verified with original by the Client Registration Department and a stamp “Verified with Original” will be affixed and signed by the person verifying it.
– In person verification should be carried out by the staff and stamp should be affixed for in person verification

Registration of Intermediaries:

The procedure as prescribed for registration of Approved Person’s will be followed.

Brokerage will be shared with the respective Approved person only after the Approval of Registration by the Exchange.

No Brokerage will be paid to the Approved Person for the trades executed prior to registration.

Trading Terminal

– The Terminal User should be NCFM certified. Before allowing the user to operate the terminal, the copy of NCFM certificate will be collected and verified with the original.

– The user will be asked to renew the NCFM certificate on its expiry. If the user fails to renew the certificate then he would not be allowed to operate the same any further. The renewed copy of the certificate will be re-obtained and verified with original.

– The guidelines laid down by the Exchange for Approved User and Location of trading terminal will be strictly followed. It would be made sure that there is no issue of trading terminals to unauthorized persons or at unauthorized locations.

– The data regarding new user as well as modification in existing user should be immediately uploaded and documented on modification or issue to the new user as the case may be.

Clients Transactions

Transactions of few major clients would be monitored, if required and in case of any suspicion from our side of possibility of any malfunctioning y the client. If required the client will be asked to stop such kind of malfunctioning or may be even asked to stop trading.

Order Placement

– The orders will be placed by the respective Dealer as per the instructions from the clients.

– However, it should be made sure that the priced put up should not be unrealistic or not representing the correct market price.

– Every time before execution of order a final confirmation of the entire order should be made to the client.

– The clients should not be induced to either Buy or sell.

Others

– Complete confidentiality of Client information should be maintained. No client information would be given except if required by law.

– Proper records as required by various statues will be maintained.

Objective :

To frame the guidelines for modification to non-institutional client codes post trade execution and reporting of such Client Code Modifications.

Brief about Client Code Modification :

Client Code Modification means modification / change of the client codes after execution of trades. Stock Exchanges provide a facility to modify any client code after the trade has been executed to rectify any error or wrong data entry done by the dealers at the time of punching orders. However, such Client Code modification is subject to certain guidelines as to the time limit within which the client code modification is to be carried out, terminal / system on which such modifications can be done etc. The facility is mainly to provide a system for modification of client codes in case genuine errors in punching / placing the orders. It is to be used as an exception and not as a routine process. To prevent misuse of the facility Stock Exchanges levy penalty / fine for all non-institutional client code modification.

Scope of the Policy :

This policy covers all the Client Code Modifications carried out / to be carried out in any of the client accounts, subject to the guidelines issued by the SEBI / Stock Exchanges from time to time, in any segment of any exchange for which SERNET Financial Services Pvt. Ltd. is a member broker.

“Error Trades” means the trades which will be modified / to be modified / allowed, to be modified subject to guidelines of the SEBI / Stock Exchanges and this policy.

For the purpose of this Policy, only the following types of trades shall be modified / allowed to be modified, genuineness or error if the pre condition of error modification:

i. Error due to communication and/or punching or typing such that the original client code/ name and the modified client code / name are similar to each other.

ii. Modification within relatives (‘Relative’ for this purpose would mean “Relative” as defined under the Companies Act, 1956).

General Conditions :

i. The facility for Client Code Modification can be used only in case of Error Trade.

ii. The Client Code Modification shall be carried out only on the designated system and / or as per the process as may be prescribed by SEBI / Stock Exchange and this policy.

iii. The client code modification shall be carried out after due approval from compliance / senior management i.e. the modification needs to be done by Risk Team only after due approval by Compliance head / Dealing Head or Organization Head.

Place for Client Code Modification :

All the Error Trades executed on NSE and BSE of their Capital Market, Future and Options and Derivatives Segments Client Code Modification shall applicable subject to compliance of this policy, be carried at the corporate office.

Surveillance :

A record for trade change will be maintained with Compliance to keep a track of frequent code change by Dealer & Trader.

The above Policy was approved by the Board of Directors of the Company at its Meeting held on 01-04-2021.

For SERNET Financial Services Pvt. Ltd.
Authorized Signatory

About Dormant Account:

Inactive client means if no trades are carried out by the client in the last 12 (Twelve) months across all Exchanges.

A list of inactive clients shall be prepared from the back office software on the last day of every month and shall be submitted to the concerned department after confirmation with the management. The management will approve a final list of inactive clients.

A copy of the list is also forwarded to dealers who operate our terminals.

The concerned department shall mark the client status as “Inactive” or “Dormant” in various front office software, back office accounting software and UCC database of all the respective Exchanges.

After inactive marking, if any orders are received, the dealer shall take reasonable steps to identify the identity of the client and to ensure that the orders are received from the same client. The dealer shall use various techniques like call back, asking personal detail questions, last trade date, outstanding positions etc. to confirm the identity of the caller. They may use any other technique which is reasonable. In case of a doubt the case shall be referred to the management or concerned Authorized Person or Introducer.

Return of Client Asset for Inactive Account:

We have a process of Quarterly / Monthly Settlement of Client Funds & Securities. The Demat accounts of Clients trading with us are opened with ______. The Securities pertaining to the client are transferred on a Quarterly basis to the respective client account and the funds are also settled on a Quarterly basis.

In case of inactive account where the client is not traceable, we have a procedure of following up with the client through the registered email address and contact no. provided by the client at the time of account opening.

The securities of inactive client who are not traceable are kept in the client individual beneficiary account.

Re-activation of Trading Account:

The dormant account will be activated only after receiving request from the client to re-activate his accounts along with all the required formalities of KYC COMPLIANCE. The re-activating of trading account will require the following details/documents:

– Proof of identity.
– Latest Proof of Residential Address.
– Latest Proof of Bank account.
– Latest Proof of Demat statement.
– Financial Details (Applicable for Derivatives Segment).

The above Policy was approved by the Board of Directors of the Company at its Meeting held on 01-04-2021.

For SERNET Financial Services Pvt. Ltd.
Authorized Signatory

SERNET Financial Services Pvt. Ltd. (hereinafter referred as ‘the Company’) endeavors to preserve the confidentiality of unpublished price sensitive information and to prevent the misuse of such information. The Company is committed to transparency, fairness in dealing with all stakeholders and in ensuring adherence to all laws and regulations in force.

Every director, officer, designated employee of the Company has a duty to safeguard the confidentiality of all information obtained during the course of his or her employment at the Company.

In terms of SCHEDULE B and sub-regulation (2) of regulation 9 under the SEBI (PROHIBITION OF INSIDER TRADING) REGULATIONS, 2015, the following policies and procedures have been set forth for the implementation of trading in securities by the employees of the Company (hereinafter referred as Code of Conduct). The salient features of the Code of Conduct are as under:

This Code of Conduct will be effective from the start of business hour.

Applicability

This Code of Conduct shall be applicable to the employees including Director and KMP of the Company along with its out sourced employees, if any.

Definitions & Interpretation

1. “Act” means the Securities and Exchange Board of India Act, 1992;

2. “BOARD” means the Board of Directors of the Company.

3. “REGULATIONS” means the SEBI (Prohibition of Insider Trading) Regulations, 2015;

4. “CODE OR CODE OF CONDUCT” shall mean this Code of Internal Procedures and Conduct for regulating, monitoring and reporting of trading by Insiders of the SERNET Financial Services Pvt. Ltd. as amended from time to time.

5. “COMPANY” means SERNET Financial Services Pvt. Ltd.;

6. “COMPLIANCE OFFICER” means the designated Compliance officer of the Company.

7. “DEALING IN SECURITIES” means to subscribe, sell, buy or agreeing/agreed to subscribe, sell, purchase or deal in the securities of the Company by himself/herself/itself or through an agent.

“DESIGNATED EMPLOYEE(S)” shall include: —
– All Executive Directors including Managing Director, Whole Time Director and Key Management Personnel (KMP)
– All department heads and vice presidents of the Company.
– every employee in the Finance, Accounts, Corporate Secretarial and Legal Department as may be determined and informed by the Compliance Officer;
– Such other persons or employee as may be determined and informed by the Compliance Officer from time to time.

9. “DIRECTOR” means the member of Board of Directors of the Company.

10. “EMPLOYEE” means every employee of the Company including Director in the employment of the Company. “INSIDER” means any person who is:
– a connected person; or
– in possession of or having access to unpublished price sensitive information.

11. “IMMEDIATE RELATIVES” means a spouse of a person, and includes parent, sibling, and child of such person or of the spouse, any of whom is either dependent financially on such person, or consults such person in taking decisions relating to trading in securities;

12. “GENERALLY AVAILABLE INFORMATION’ means the information which is available for public on non-discriminatory basis.

13. “KEY MANAGERIAL PERSON” means the person as defined in Companies Act, 2013.

14. “PROMOTERS” shall have the meaning assigned to it under the Securities And Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009 or any modification thereof.

15. “Securities” means as defined under SCRA, 1956 or any modifications thereof.

16. “Takeover Regulations” means the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 and amendments thereto.

17. “Trading” means and includes subscribing, purchasing, selling or agreeing/agreed to subscribe, purchase and sell or deal in securities.

18. “Trading Day” means a day on which the recognized stock exchanges are open for trading.

19. “Connected Person” means,
– any person who is or has during the six months prior to the concerned act been associated with a company, directly or indirectly, in any capacity including by reason of frequent communication with its officers or by being in any contractual, fiduciary or employment relationship or by being a director, officer or an employee of the company or holds any position including a professional or business relationship between himself and the company whether temporary or permanent, that allows such person, directly or indirectly, access to unpublished price sensitive information or is reasonably expected to allow such access.
– Without prejudice to the generality of the foregoing, the persons falling within the following categories shall be deemed to be connected persons unless the contrary is established,
(a) an immediate relative of connected persons specified in clause (i); or
(b) a holding company or associate company or subsidiary company; or
(c) an intermediary as specified in section 12 of the Act or an employee or director thereof; or
(d) an investment company, trustee company, asset management company or an employee or director thereof; or
(e) an official of a stock exchange or of clearing house or corporation; or
(f) a member of board of trustees of a mutual fund or a member of the board of directors of the asset management company of a mutual fund or is an employee thereof; or
(g) a member of the board of directors or an employee, of a public financial institution as defined in section 2 (72) of the Companies Act, 2013; or
(h) an official or an employee of a self-regulatory organization recognised or authorized by the Board; or
(i) a banker of the company; or
(j) a concern, firm, trust, Hindu undivided family, company or association of persons wherein a director of a company or his immediate relative or banker of the company, has more than ten per cent. of the holding or interest;

20. “unpublished price sensitive information” means any information, relating to a company or its securities, directly or indirectly, that is not generally available which upon becoming generally available, is likely to materially affect the price of the securities and shall, ordinarily including but not restricted to, information relating to the following:
– financial results
– dividends
– change in capital structure
– mergers, de-mergers, acquisitions, de-listings, disposals and expansion of business and such other transactions;
– changes in key managerial personnel; and
– material events in accordance with the listing agreement.

21. “Relative” means a person, as defined in section 2(77) of the Companies Act, 2013;

22. “unpublished” means information which is not published by the company or its agents and is not specific in nature.

23. “Specified Persons” means the Directors, connected persons, the insiders, the designated employees and the promoters and immediate relatives are collectively referred as Specified Persons. Words and expressions used and not defined here but defined in the SEBI Act, 1992, SCRA, 1956, Depositories Act, or the Companies Act, 2013 and the rules and regulations made thereunder shall mean as defined therein.

24. “Restricted Securities” means Security (ies) of which price sensitive information has been acquired

Role of Compliance Officer

– The Compliance Officer shall report on insider trading to the Board of Directors of the Company and in particular, shall provide reports to the Chairman of the Audit Committee, if any, or to the Chairman of the Board of Directors at such frequency as may be stipulated by the Board of Directors.
– The Compliance Officer shall assist all employees in addressing any clarifications regarding the Securities & Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015 and the Company’s Code of Conduct.
– Maintaining relevant documents for complying this regulation

Chinese wall policy

– To prevent the misuse of confidential information the organization has adopted a ‘Chinese Wall’ policy which separates those departments of the Company which routinely have access to confidential information, considered “Sensitive Departments”.
– The Employees in the ‘Sensitive Department’ shall not communicate any Price sensitive information to anyone in other department.
– The employees in sensitive departments are physically segregated from employees of other departments. Demarcations of the various departments as sensitive departments are implemented by the Company.
– In exceptional circumstances, employees from the Sensitive departments may be brought “over the wall” and given confidential information on the basis of “need to Know” criteria, under intimation to the Compliance Officer.

Preservation misuse of “Price Sensitive Information”

– All insiders of the Company shall maintain the confidentiality of all Price Sensitive Information. Price sensitive information in our business will be any information acquired in related as described in B(20) during the course of business which otherwise would not have been available to general public
– Price sensitive information is to be handled on a “Need to Know” basis i.e. price sensitive information should be disclosed only to those within the Company who need the information to discharge their duty and whose possession of such information will not give rise to a conflict of interest or appearance of misuse of the information.
– Employees shall not use price sensitive information to buy or sell securities of any sort, whether for their own account or their relative’s account.
– Files containing confidential information shall be kept secure. Computer files must have adequate security of login and password etc.
– The employees in the Research department shall follow the policies, procedures & disclosures requirements as given in the Chapter III of SEBI (Research Analysts) Regulations, 2014.

Holding Period for Restricted Securities

– Holding period of the Security(ies) of which price sensitive information acquired (‘Restricted Securities’) ,should be for a Minimum period of 6 months (inclusive of Sundays and other holidays) for any trade including for F&O.
– The holding period shall also apply to purchases in the primary market (IPO) of Restricted Securities. In the case of IPOs, the holding period would commence when the Restricted Securities are actually allotted.
– In case the sale of restricted securities is necessitated due to personal emergency, the Compliance Department may waive the holding period after recording in writing reasons in this regard.

Restricted / Grey List

– In order to monitor Trading in Client Securities based on Inside Information, the Company shall restrict Trading in certain Securities and designate such List as Restricted / Grey List.
– Security of a Listed Company shall be put on the Restricted / Grey List if the Company is handling any Assignment for the Company or preparing Appraisal Report.
– As the Restricted List itself is a Highly Confidential Information it shall not be communicated to anyone outside the Company.

Initial Disclosures & Continual Disclosures

– The disclosures to be made by any person include those relating to trading by such person’s immediate relatives, and by any other person for whom such person takes trading decisions in prescribed format if any.
– Every promoter/ Key Managerial Personnel / Director / Officers / Designated Employees of the Company, , shall forward to the Company the details of all holdings in securities of the Company held by them including the statement of holdings of dependent family members in the prescribed Form as circulated which will be declared as Restricted or Grey listed Security immediately.
– Every person on appointment as a key managerial personnel or a director of the Company or upon becoming a promoter shall disclose his holding of restricted securities of the Company as on the date of appointment or becoming a promoter, to the Company within seven days of such appointment or becoming a promoter.
– Any change in holding pattern of that Restricted or Gray Listed Securities should be informed immediately.

CODE FOR FAIR DISCLOSURE

A code of practices and procedures for fair disclosure of unpublished price sensitive information for adhering each of the principles includes as below:

– Prompt public disclosure of unpublished price sensitive information that would impact price discovery no sooner than credible and concrete information comes into being in order to make such information generally available.
– Uniform and universal dissemination of unpublished price sensitive unpublished price sensitive information to avoid selective disclosure.
– Prompt dissemination of unpublished price sensitive information that gets disclosed selectively, inadvertently or otherwise to make such information generally available.
– Appropriate and fair response to queries on news reports and requests for verification of market rumors by regulatory authorities.
– Ensuring that information shared with analysts and research personnel is not unpublished price sensitive information.
– Developing best practices to make transcripts or records of proceedings of meetings with analysts and other investor relations conferences on the official website to ensure official confirmation and documentation of disclosures made.
– Handling of all unpublished price sensitive information on a need-to-know basis

Penalty for contravention of the code of conduct

– Employees who violate the Code of Internal Procedure and Conduct will be subjected to appropriate action by the Company, which may include disciplinary action, wage freeze, suspension, termination of services etc. as decided by the management.
– The action by the Company shall not preclude SEBI from taking any action in case of violation of SEBI (Prohibition of Insider Trading) Regulations 2015.
– In case it is observed that there has been a violation of these Regulations, the Company shall inform SEBI.

Compliance and questions

The Company considers it extremely important that all employees conduct themselves in a manner consistent with this insider trading policy. Each employee is responsible for his or her compliance with this policy and the related procedures, and the Company will endeavor to answer any questions employees may have regarding this subject. Employees are requested to direct any questions regarding the Company’s insider trading policy or procedures to the Compliance officer

The above Policy was approved by the Board of Directors of the Company at its Meeting held on 01-04-2021.

For SERNET Financial Services Pvt. Ltd.
Authorized Signatory

Equity Capital Market Segment: (EQCM)

– Since company does not entertain walk-in clients and settlement is on daily basis, no margin will be taken from clients up to order value of ?10 lac in a single day. (Purchase as well as sale)

– Margin @ 10% will be taken for purchase order value exceeding ?10 lac in a single day.

– For purchase orders executed exceeding ?50 lac in a single day, additional margin @ 25% will be given by the clients on T day (Trading Day) to enable the broker to make early payin. (EPI).

– For sale orders exceeding ?50 lac in a single day, clients will be required to deposit 100% delivery on the date of trade. (T day) to enable broker to make early payin (EPI).

– In order to ensure smooth settlement on T + 2 day, client has to ensure that entire balance payment against purchase and entire delivery against sale orders reaches the broker’s specific bank and DP a/c on T + 1 day or latest by 9.30 a.m. on T + 2 day.

– In case of clients’ failure to deposit funds against their purchases by above mentioned time schedule, penal action against the clients at the discretion of the stock broker will be taken, which will include non-delivery of shares to them, sale of shares in the market, payment delayed charges @18% p.a. for delayed period, difference between purchase and sale amount.

– In case of clients’ failure to deliver shares against their sale orders by the above time schedule, penal action will be taken by the stock broker at his discretion which will include penalty for short delivery as imposed by the Exchange, auctioning of shares by the Exchange, debiting on account of internal shortage.

All clients are requested to adhere to the above schedule of settlement so that broker is able to complete payin in time and the Stock Exchange does not impose any penalty on the broker and also does not disrepute him.

F & O Segment

– Setting up Client’s Exposure Limit : The Exchange may from time to time fix client exposure limits in the interest of orderly working of the markets. Within that overall ceiling, a client can trade within the exposure limit set from time to time by the Broker for the client. Exposure Limit is fixed on the basis of the funds and value after hair cut of the securities provided by the client for margin. Clients are requested to adhere to the exposure limits as crossing the limit may involve either a call for margin or restriction on further position / exposure. The Stock Broker may need to vary or reduce or impose new limits urgently on the basis of risk perception, risk profile of the client and other factors considered relevant including but not limited to limits on account of exchange / SEBI directions / limits (such as broker level / market level limits in security specific / volume specific exposures etc.). Sometimes the Stock Broker may be unable to inform the client of such variation, reduction or imposition in advance. The Stock Broker shall not be held responsible for such variation, reduction or the client’s inability to route any order through trading system on account of any such variation, reduction or imposition of limits. In the sole discretion of the Stock Broker, a client may be allowed to trade beyond exposure limit or the limit may be increased. A client having availed such indulgence shall not be heard to complain about his trades only on this account and shall meet the margin shortfall at the earliest without waiting for reminder. The golden rule is Limit your exposure so as to limit your risk to your means.

Right of Sale of client’s securities or closing the client’s open position without giving notice : The Stock Broker maintains specific banking and depository accounts, informed to the clients from time to time, for handling clients’ funds and securities. The clients shall ensure timely availability of funds / securities in required form and manner, within stipulated time and in the designated bank and depository account(s) for meeting their liabilities and obtaining proper credit thereof. The Stock Broker does not undertake responsibility for any delay or other consequences arising from payment to any other account or non receipt in time and manner in the designated account(s).

The Stock Broker does not believe in selling clients’ securities or closing out their positions without sufficient notice to them. On the other hand, the Stock Broker expects esteemed clients to be regular and punctual in meeting their fund obligations. The requirement of margin and the value of any given security as margin varies with market volatility.

e.g – If the market goes down by 10%, not only an additional margin would be required equal to this 10%, but further margin would also be required to meet the erosion of value of the securities forming the margin. Higher is the margin deficit, shorter would be the time to make it up. However. In case the available margin fails below the given percentage, say 80%, informed in advance, the Stock Broker reserves the right to sell a client’s securities or to close out his all or some open positions to prevent escalation of risk.

The Stock Broker would have the discretion to square off the position of Client’s where the margin or security placed by the Client falls short of the requirement of where the limits given to the Client have been breached or where the Client has defaulted on his existing obligation within the stipulated time.

The client may, however, have no grievance if the Stock Broker does not take such action and waits for the client’s margin / response.

– Conditions under which a client may not be allowed to take further position or his existing position may be closed: Subject to client’s KYC verification and his meeting initial margin and other margin requirements, a client may take positions. However, he may not be allowed to take further position under any of the following circumstances:

(a) SEBI or Exchange imposing restrictions on further exposures in cases of extreme volatility in the market or in a security or group of securities.
(b) Client or the Broker exceeding or touching exposure limits set by the Exchange in the particular scrip.
(c) Reasonable doubt as to bonafide of the transaction or identity of the client in the light of the financial status and objectives as disclosed in the KYC form.
(d) Reasonable doubt as to the transaction being cross trade, circular trade, fraudulent practice or connected with price manipulation or market rigging.
(e) SEBI or other competent authority issuing a debarment order against the client from buying, selling or dealing in securities, unless the order is vacated.

The above Policy was approved by the Board of Directors of the Company at its Meeting held on 01-04-2021.

For SERNET Financial Services Pvt. Ltd.
Authorized Signatory

A. INTRODUCTION

– Outsourcing means the use of one or more than one “Third Party”, either within or outside the group, by a Registered Intermediary to perform the activities associated with services which the intermediary offers. A third party may be used to perform one or more activities or one or more third parties may be used to perform different activities associated with the intermediation service. Such use may be for a specified period or on a continuing basis. However, there are various risks associated with outsourcing which may be identified as operational risk, reputational risk, legal risk, country risk, strategic risk, exit-strategy risk, counter party risk, concentration and systemic risk.

– In order to address the concerns arising from the outsourcing of activities by intermediaries based on the principles advocated by the International Organization of Securities Commission (IOSCO) and the experience of Indian markets, SEBI had prepared guidelines on outsourcing of activities related to services offered by intermediaries.

– SERNET Financial Services Pvt. Ltd. (“Company”) is SEBI Registered Intermediary as Stock Broker, Depository Participant

– In pursuance of SEBI Circular No. CIR/MIRSD/24/2011 dated December 15, 2011, a policy on Outsourcing of Activities by Intermediaries needs to be in place to ensure high standards of continuing services and exercise due diligence and proper care in its operations.

B. SCOPE

– This policy is to be applied by the Board, Senior Management and Employees of, the Company, at the time of outsourcing activities of:

– The key purposes of the policy are as follows:
(a) To establish a comprehensive risk management programme to address the outsourced activities and the relationship with Service Provider.
(b) To conduct due diligence of the Service Provider to ascertain the credibility and capability of the Service Provider.
(c) To maintain confidentiality of the information that is outsourced.
(d) To ensure compliance with the laws and regulations in force from time to time.
(e) To protect the Company reputation.
(f) To conduct outsourcing of activities in accordance with this policy.
(g) To identify the supervisors and fix their responsibilities.

C. COMMENCEMENT

This Outsourcing Policy comes into effect from May 19, 2012 (“Effective Date”) that is the date of adoption the Board at its meeting held on Subject to the approval of the Board.

D. DEFINITIONS

– “Board” means the Board of Directors of, the Company.

– “Client” means existing or potential client of the Company availing any or all of the services of the Company.

– “Company” SERNET Financial Services Pvt. Ltd.

– “ Core Business Activity” means all those activities for which SEBI has granted registration and which are inseparable from the very existence of the Company.

– “ Employee(s)” means person(s) who’s on the payroll of the Company.

– “ Investor” means person
(a) whose name is entered in the register of members of, the Company;
(b) whose name is entered as beneficial owner in the records of the depository(ies).

– “ Outsourcing of Activity” means the use of one or more “third parties” or the Group Company by the Company to perform the activities associated with services which the Company offers.

– “ Outsourcing Contract” means a written agreement between Company and Service Provider defining the terms and conditions of outsourcing of activity

– “SEBI” shall mean Securities and Exchange Board of India

– “Senior Management” shall mean and include the following personnel of the Company:
(a) Chief Executive Officer, Chief Operating Officer, Chief Financial Officer, Company Secretary, Chief Marketing Officer or any such equivalent position
(b) Heads of All Core Departments of the Company
(c) Assistant Vice President and above equivalent position
(d) General Manager, Manager or equivalent positions
(e) Directors or employees who may be designated by the Chairman & Managing Director and the Executive Director from time to time
(f) Any employee who is specifically authorized to enter into contracts by the Board

– “Service Provider” includes those persons to whom the activity is outsourced and be named as service provider in the contract with the Company

– “Supervisor” means the person who will be responsible for the overall supervision of the outsourced activity.

– “Third Party” includes persons who is neither the Company nor its Group Company

Capitalized terms not defined herein shall the same meaning as provided under the Regulations. Grammatical variations and connotations of word(s) may be constructed accordingly.

E. ACTIVITIES NOT TO BE OUTSOURCED

– Company shall not outsource its core business activities and compliance functions.

– An activity shall not be outsourced if it would impair the Board’s right to assess, or its ability to supervise, the business of SERNET Financial Services Pvt. Ltd. or Group.

F. COMPREHENSIVE RISK MANAGEMENT REPORT

Before Outsourcing the activity, it shall be the responsibility of the Supervisor in consultation with the Senior Management, to assess the risks associated with outsourcing of activity of his/her Department and prepare a Risk Management Report as per Annexure I. This Report shall be preserved and maintained along with the Outsourcing contract.

G. SELECTION OF THIRD PARTY

– The Supervisor shall exercise due care, skill and diligence in the selection of the third party in order to ensure that the third party has the ability and capacity to undertake the provision of services effectively. The due diligence shall include assessment of:
(a) Third Party’s resources and capabilities, including financial soundness, to perform the outsourcing work within the timelines fixed;
(b) compatibility of the practices and systems of the Third Party with the intermediary’s requirements and objectives;
(c) market feedback of the prospective Third Party business reputation and track record of their services rendered in the past;
(d) level of concentration of the outsourced arrangements with a single Third Party;
(e) The environment of the foreign country where the Third Party is located.

– A Due Diligence Report shall be obtained from the Third Party as per Annexure II. and be maintained along with the Outsourcing Contract.

H. OUTSOURCING OF ACTIVITY TO GROUP COMPANIES

– The Company may outsource its activity to any of its Group Companies to act as the Service Provider

– The Company shall ensure that an arm’s length distance is maintained in terms of manpower, decision –making, record keeping, etc. for avoidance of potential conflict of interests between the Company and Group Companies and accordingly necessary disclosures in this regard shall be made as part of the outsourcing agreement.

I. OUTSOURCING CONTRACTS

– All outsourcing arrangements shall be executed only by way of a clearly defined and legally binding written contact with each of the Service Provider.

– Care shall be taken to ensure that the outsourcing contract:

(a) clearly defines what activities are going to be outsourced, including appropriate service and performance levels;

(b) provides for mutual rights, obligations and responsibilities of the Company and the Service Provider, including indemnity by the parties;

(c) provides for the liability of the Service Provider to the Company for unsatisfactory performance/other breach of the contract

(d) provides for the continuous monitoring and assessment by the Company of the Service Provider so that any necessary corrective measures can be taken up immediately, i.e., the contract shall enable the Company to retain an appropriate level of control over the outsourcing and the right to intervene with appropriate measures to meet legal and regulatory obligations;

(e) includes, where necessary, conditions of sub-contracting by the Service Provider, i.e. the contract shall enable Company to maintain a similar control over the risks when a Service Provider outsources to further third parties as in the original direct outsourcing;

(f) has unambiguous confidentiality clauses to ensure protection of proprietary and customer data during the tenure of the contract and also after the expiry of the contract;

(g) specifies the responsibilities of the Service Provider with respect to the IT security and contingency plans, insurance cover, business continuity and disaster recovery plans, force majeure clause, etc.;

(h) provides for preservation of the documents and data by Service Provider;

(i) Provides for the mechanisms to resolve disputes arising from implementation of the outsourcing contract;

(j) provides for termination of the contract, termination rights, transfer of information and exit strategies;

(k) Addresses additional issues arising from country risks and potential obstacles in exercising oversight and management of the arrangements when Company outsources its activities to foreign Service Provider. For example, the contract shall include choice-of-law provisions and agreement covenants and jurisdictional covenants that provide for adjudication of disputes between the parties under the laws of a specific jurisdiction;

(l) neither prevents nor impedes the Company from meeting its respective regulatory obligations, nor the regulator from exercising its regulatory powers; and

(m) Provides for the Company and /or the regulator or the persons authorized by it to have the ability to inspect, access all books, records and information relevant to the outsourced activity with the Service Provider.

J. DISASTER RECOVERY PLAN

– Specific contingency plans shall be separately developed for each outsourcing arrangement, as is done in individual business lines.

– The concerned Senior Management shall take appropriate steps to assess and address the potential consequence of a business disruption or other problems at the Service Provider level. Notably, it shall consider contingency plans at the Service Provider level; co-ordination of contingency plans at both levels and in the event of non-performance by the Service Provider.

– The Senior Management shall ensure that the Service Provider maintains appropriate IT security and robust disaster recovery capabilities.

– Periodic tests of the critical security procedures and systems and review of the backup facilities shall be undertaken by the Company to confirm the adequacy of the Service Provider’s systems

K. CLIENT CONFIDENTIALITY

– The Company is expected to take appropriate steps to protect its proprietary and confidential customer information and ensure that it is not misused or misappropriated.

– The Company shall prevail upon the Service Provider to ensure that the employees of the Service Provider have limited access to the data handled and only on a “need to know” basis and the Service Provider shall have adequate checks and balances to ensure the same.

– In cases where the Service Provider is providing similar services to multiple entities, the Company shall ensure that adequate care is taken by the Service Provider to build safeguards for data security and confidentiality.

L. REPORTING

– An activity to be outsourced shall be approved by the concerned Senior Management and he/she shall be responsible to report any discrepancy or risk occurred to the Board.

– The Supervisor shall be responsible to monitor and control the outsourced activity and in case any discrepancy detected, the same shall be reported to the concerned Senior Management.

– The Board shall be responsible for reporting of any suspicious transactions / reports to FIU or any other competent authority in respect of activities carried out by the Service Provider.

M. MAINTENANCE OF RECORDS

– The records relating to all activities outsourced shall be preserved centrally so that the same is readily accessible for review by the Board of the Company and / or its senior management, as and when needed.

– Such records shall be regularly updated and may also form part of the corporate governance review by the management of the Company.

N. REVIEW

– Regular reviews by internal or external auditors of the outsourcing policies, risk management system and requirements of the regulator shall be mandated by the Board wherever felt necessary.

– Company shall review the financial and operational capabilities of the third party in order to assess its ability to continue to meet its outsourcing obligations.

For the benefit of the Senior Management and Employees, a checklist of the policy is provided.

The above Policy was approved by the Board of Directors of the Company at its Meeting held on 01-04-2021.

For SERNET Financial Services Pvt. Ltd.
Authorized Signatory