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NISM Certifications · NISM-Series-VI: Depository Operations · Special Services - Debt Instruments and Government Securities

A client holds Government Securities (G-Secs) in a Subsidiary General Ledger (SGL) account with a bank and wishes to hold them in demat form. Which of the following is the usual route for the client to hold G-Secs in electronic form through a depository?

The client can hold Government Securities in a demat account opened with a depository participant. Depositories admit G-Secs in dematerialised form, so there is no need to convert to physical certificates or rely only on an SGL route.

  1. AOpen a Constituent SGL account only, as depositories cannot hold G-Secs
  2. BHold them in a demat account with a depository participant, as G-Secs can be held in demat formCorrect
  3. CConvert them into physical certificates first and then lodge them with the issuer
  4. DHold them only through a stock exchange clearing corporation member account

Explanation

G-Secs can be held in dematerialised form in a beneficiary owner account with a DP. Depositories hold G-Secs and treasury bills in demat form, so the client need not use physical certificates or an SGL-only route.

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