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

A depository participant receives a request from a BO to close his demat account. The account has a remaining balance of 200 shares of a company. Which course of action is consistent with account closure procedure?

The DP can close the account only after the holder moves the 200 shares to another demat account or rematerialises them and submits a closure request. Closing with a balance, cancelling shares, or parking them indefinitely is not permitted.

  1. AClose the account and keep the shares in a DP suspense account indefinitely
  2. BClose the account after the BO transfers the balance to another demat account or rematerialises it, and submits a closure requestCorrect
  3. CClose the account and cancel the shares
  4. DRefuse closure permanently even if all charges are paid

Explanation

An account with securities cannot simply be closed; the balance must first be moved to another account of the BO or rematerialised. After the BO submits the closure request and dues are cleared, the DP closes it. Cancelling shares or parking them indefinitely is not permitted.

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