NISM Certifications · NISM-Series-VI: Depository Operations · Investor Services (NISM VI)
A BO wishes to freeze his demat account for debits only, because he expects to be away for a long period. Which outcome correctly describes the effect of a debit freeze?
A debit freeze stops all debits from the account, such as transfers and sales, while still allowing credits like bonus shares or IPO allotments to arrive. Blocking credits requires a separate credit or total freeze, and the account itself stays open.
- ANo debits can be made, but credits such as bonus shares can still be receivedCorrect
- BNeither debits nor credits are allowed
- COnly credits are blocked
- DThe account is closed automatically
Explanation
A debit freeze blocks all debit transactions (sales, transfers, pledges) but credits continue to be accepted. Blocking credits would need a credit freeze or a total freeze, and freezing does not close the account.
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