Skip to content

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

A DP is asked to handle a corporate debenture holding in demat form. Which statement about the redemption of a debt instrument held in a depository is correct?

On redemption of a demat debenture, the holding is debited from the investor's demat account and the issuer pays the redemption proceeds through its registrar or payment mechanism. The investor need not rematerialise, and the DP does not pay from its own funds.

  1. AOn redemption the depository debits the securities from the investor's account and the issuer pays through its RTA/payment mechanismCorrect
  2. BThe investor must first rematerialise the debenture to get redemption
  3. CThe DP pays the redemption amount from its own funds
  4. DRedemption requires the investor to submit a pledge instruction

Explanation

For demat debt, the securities are extinguished by debit of the holder's balance on redemption date and the issuer pays the proceeds to the holder, typically through bank details on record. No rematerialisation or DP funding is needed, and pledge is unrelated.

Did you get it right without looking?

One question tells you little. A timed set on Special Services - Debt Instruments and Government Securities shows your real accuracy, how long you take and where you lose marks.

Practise Special Services - Debt Instruments and Government SecuritiesFree diagnostic mock

More Special Services - Debt Instruments and Government Securities questions