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

A BO's demat account is frozen by the DP for debits only, following a court order, but credits remain allowed. Which of the following will the DP most likely accept during the freeze?

The DP will accept the credit of bonus shares because the freeze restricts only debits. Off-market transfers, pay-in debits and pledge creation all take securities out of the free balance and are therefore blocked, whereas incoming credits from corporate actions continue to be processed.

  1. ACredit of bonus shares allotted by the issuer into the accountCorrect
  2. BA DIS for off-market transfer of securities to another BO
  3. CA market-trade pay-in debit instruction by the BO
  4. DA request to create a pledge of the shares

Explanation

A debit freeze blocks outgoing movements of securities from the account, such as off-market transfers, pay-in debits and pledge creation, because pledge also locks the securities out of free balance. Credits, such as bonus shares from corporate actions, are still permitted as the freeze applies only to debits.

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