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NISM Certifications · NISM-Series-VI: Depository Operations · Functions of Depository Participant - Account Operations

A BO's demat account holds securities worth Rs 9,00,000. The BO wishes to move the account from one DP to another DP of the same depository without closing it permanently in a way that loses holdings. Which statement is correct about the process?

The BO transfers all holdings to the new demat account through a valid transfer instruction, and the old account is closed once its balance is nil. Closure with holdings outstanding is not allowed, rematerialisation is not required, and the transfer is never automatic without the BO's instruction.

  1. AThe BO can transfer all holdings to the new account using a transfer instruction, and the old account can be closed after the balance becomes nilCorrect
  2. BThe old account can be closed only after securities are rematerialised into certificates
  3. CClosure is possible while securities remain in the account if the DP agrees verbally
  4. DThe new DP automatically receives the holdings without any instruction from the BO

Explanation

To close an account, the BO submits a closure request and the account must have no balance, so securities are first transferred through a valid instruction to another demat account. Rematerialisation is not required, verbal agreements are invalid, and no transfer happens automatically without an instruction.

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