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NISM Certifications · NISM-Series-VI: Depository Operations · Investor Services (NISM VI)

A BO holds an account that has been inactive for a long time and wishes to transfer securities out. The DP finds that the account's KYC is not complete as per the current norms. Which action by the DP is most consistent with regulatory expectations?

The DP should ask the BO to complete the KYC formalities and process the transfer only once the account complies. Regulations expect KYC to be in order for operating the account, and the DP cannot forfeit or move the BO's securities to its own account.

  1. AAsk the BO to complete the KYC formalities and process the transfer only after complianceCorrect
  2. BProcess the transfer and update KYC next year
  3. CClose the account and forfeit the securities
  4. DTransfer securities to the DP's own account until KYC is done

Explanation

DPs must ensure KYC compliance for the account; non-compliant accounts can face restrictions on operations. The DP should have the BO complete the formalities first. Processing regardless ignores the rule, while forfeiture or moving securities to the DP's account is unauthorised and harms the BO.

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