NISM Certifications · NISM-Series-VI: Depository Operations · Special Services - Pledge and Hypothecation
A borrower has fully repaid a loan secured by a depository pledge. What is the correct step to free the securities?
The pledgee initiates a pledge closure request through its DP after the loan is repaid, and on confirmation the securities are released to the pledgor's free balance. They are not freed automatically and need no re-dematerialisation or reissue by the issuer.
- AThe pledgee initiates a closure request, and the pledgor's securities are unblocked once it is confirmed in the systemCorrect
- BThe securities are freed automatically after 30 days
- CThe pledgor must apply to the issuer for reissue of securities
- DThe pledgor must dematerialise the securities again
Explanation
Pledge closure is initiated by the pledgee through its DP after repayment, and once confirmed the pledged securities are released to free balance. No time-based auto release or re-demat applies.
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