NISM Certifications · NISM-Series-VI: Depository Operations
Special Services - Debt Instruments and Government Securities in Depository Operations
This chapter covers how debt instruments such as commercial paper, certificates of deposit, bonds and government securities are issued, held and settled in demat form through depositories. To solve questions, identify the instrument, who may hold it, where it is held (depository or SGL/CSGL), and how it settles.
What this chapter covers
This chapter looks at debt in the depository system. Equity shares are the usual example in the paper. Here you see how bonds, debentures, money market instruments and government securities are held as electronic records instead of paper.
You study five areas: features and types of debt instruments, commercial paper (CP) and certificates of deposit (CD) in demat form, types of government securities, how G-Secs are held through SGL and CSGL accounts, and how debt and G-Sec trades settle.
The chapter builds on earlier parts of the paper: account opening, demat and remat, transfers, pledge and corporate actions. The same depository ideas apply here, but the instruments, holders and settlement channels differ. Questions often test whether you can tell where a rule is the same as for equity and where it is different.
Debt and G-Sec questions are mostly factual: who can issue or hold what, in which form, and through which account. With 25% negative marking in NISM-Series-VI, a wrong guess costs marks, and these topics are easy to lose through mixing up similar terms. A clear grasp of CP, CD, SGL and CSGL turns these into reliable marks, and it also helps you understand the wider system on the paper's operations side.
Special Services - Debt Instruments and Government Securities: topics in the order to study them
- 1Debt Instruments in Depository: Features and TypesStart here to learn the basic vocabulary: face value, coupon, maturity, redemption and the main types of debt.
- 2Money Market Instruments: CP and CD in Demat FormNext, short-term instruments build on the debt basics and are tested on issuer, tenor and demat-form rules.
- 3Government Securities and Their TypesLearn what G-Secs are and how they are classified before studying how they are held.
- 4SGL, CSGL and Holding of G-Secs in DematHolding structures only make sense once you know the securities and the depository framework.
- 5Settlement and Operations for Debt and G-Sec TransactionsFinish with settlement, which ties together instruments, holders and accounts.
How to prepare Special Services - Debt Instruments and Government Securities
This chapter rewards clean definitions and clear comparisons more than long reading. Work in this way.
- Read the NISM workbook chapter once, quickly, to see the five areas and their terms.
- Make a one-page comparison of CP and CD: issuer, form, and how each is held in demat. Fill it only from the workbook.
- List the types of government securities and write one distinguishing feature for each.
- Draw a simple map of how G-Secs are held. An SGL is an account with the RBI's Public Debt Office for eligible entities. A CSGL is held through a custodian. Separately, G-Secs may also be held in demat form with a depository through a depository participant. Note who holds the account in each case.
- Trace one debt trade and one G-Sec trade from deal to settlement, noting the parties at each step.
- Attempt MCQs by topic, then review each wrong answer and note the exact condition you missed.
- Revise your comparison sheet the day before the exam, and skip a question when two options both look right.
Common mistakes in Special Services - Debt Instruments and Government Securities
Treating CP and CD as the same instrument
Fix: Compare them side by side on issuer, nature and holder. Answer from the comparison, not from memory of the general idea.
Confusing SGL and CSGL
Fix: Remember that an SGL is a holding account and a CSGL is maintained by a custodian for its clients. Ask who the account holder is.
Applying equity settlement rules to debt and G-Secs
Fix: For every settlement question, first confirm the instrument, then recall the rule for that instrument.
Mixing up types of government securities
Fix: Attach one feature to each type, such as tenor or how interest is paid, and revise them together.
Guessing on options that look nearly the same
Fix: Negative marking costs 25% of the question's marks. Skip a question when you cannot narrow it to one option.
Ignoring who may hold an instrument
Fix: For each instrument, note who can hold it and in what form, and revise those notes.
Last-day revision: Special Services - Debt Instruments and Government Securities
- Debt instruments pay a fixed or defined return and are redeemed at maturity.
- CP and CD are money market instruments, and both can be held in demat form.
- Learn the issuer difference between CP and CD from the workbook, as it is a common question.
- Government securities are issued by the government and carry practically no default (credit) risk, but they are still exposed to interest rate risk.
- Know each type of G-Sec by its feature: dated securities, treasury bills and the like.
- SGL is an account with the RBI's Public Debt Office for holding G-Secs, open to eligible entities. CSGL is held through a custodian. G-Secs may also be held in demat form with a depository through a depository participant.
- A CSGL is a constituents' subsidiary general ledger account maintained by an eligible custodian (a CSGL account holder such as a bank, PD or CCIL), which itself has an SGL account with the RBI. The custodian maintains the constituents' holdings in its books. The holdings belong to the constituents, not to the custodian. Confirm the exact wording in the NISM workbook.
- Check who the account holder is before answering: investor, custodian or institution.
- Settlement of debt trades follows the rules of the exchange or the relevant system, so read the settlement cycle in the workbook.
- Do not carry equity settlement rules over to debt or G-Secs without checking.
- With 25% negative marking, skip questions where you cannot rule out two options.
Special Services - Debt Instruments and Government Securities practice questions
- A DP client in Jaipur asks what Treasury Bills (T-Bills) are, since she saw them in the auction calendar. Which description is correct?
- A bond with face value Rs 1,000 and a 9% annual coupon is bought in demat form at Rs 1,000 and held to maturity. If a Rs 10,00,000 face valu…
- Which statement about Treasury Bills (T-Bills) held by an investor in a demat account is correct?
- Mr. Iyer holds 7.26% Government of India bonds in his demat account. Which of the following correctly describes how coupon interest on such …
- A client with a demat account wants to hold Government Securities (G-Secs) issued by the Central Government in electronic form through a Dep…
- A retail investor wants to buy Government securities (G-Secs) in electronic form through the demat route in India. Where are G-Secs held in …
- A client asks how interest on a corporate debenture held in demat form is paid to him on the record date. Which is the correct position for …
- A DP is asked to handle a corporate debenture holding in demat form. Which statement about the redemption of a debt instrument held in a dep…
Special Services - Debt Instruments and Government Securities in other exams
The same ground in other exams, if you are preparing for more than one or want another angle on it.
Special Services - Debt Instruments and Government Securities: frequently asked questions
Is this chapter important for NISM-Series-VI?
Yes. It covers debt and government securities in the depository system, and the questions are factual. Clear notes on CP, CD, SGL and CSGL help you score here with little risk.
What is the difference between SGL and CSGL?
Both relate to holding government securities. An SGL is a ledger account for holding G-Secs, available only to eligible entities, while a CSGL is maintained by a custodian on behalf of its clients. Confirm the exact wording in the NISM workbook.
Can commercial paper and certificates of deposit be held in demat form?
Yes. This chapter covers CP and CD in demat form. Check the workbook for the exact rules on issuance and holding.
Is there negative marking in NISM-Series-VI?
Yes. The paper has 100 questions, 100 marks, 2 hours and a pass mark of 60%. A wrong answer costs 25% of the marks assigned to that question.