NISM Certifications · NISM-Series-VI: Depository Operations · Investor Services (NISM VI)
A BO's demat account was frozen by the DP on the instruction of the BO for debits only. Which statement correctly describes the effect?
Under a debit freeze, the BO cannot make any debits from the account, but credits such as bonus shares or newly purchased securities can still be received. Only a total freeze stops both debits and credits, and freezing never closes the account.
- ANo credits or debits can happen in the account
- BDebits are barred, but credits such as bonus shares can still be receivedCorrect
- CCredits are barred, but debits are allowed
- DThe account is closed and BO status is lost
Explanation
A debit freeze blocks all debits from the account, but credits continue to be accepted, for example corporate action benefits or purchases. A total freeze would bar both. Freezing does not close the account.
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