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NISM Certifications · NISM-Series-VI: Depository Operations · Investor Services (NISM VI)

A DP receives a request from a client to freeze his demat account for debits because he fears misuse of his instruction slips. Which statement about such a freeze is correct?

A debit freeze stops securities from being transferred out of the account but still permits credits, such as bonus shares or dividends in kind. The client can request it, and it does not close the account. Only a total freeze restricts both debits and credits.

  1. AA debit-only freeze blocks outgoing transfers but credits such as corporate action benefits can still be receivedCorrect
  2. BA debit freeze blocks both debits and credits
  3. CA freeze can only be placed by the depository and never at the client's request
  4. DA freeze automatically closes the account

Explanation

A BO can request a freeze on debits, which stops delivery out of the account while credits are still allowed. A freeze on the whole account would block both. Clients can request freezes, and a freeze does not close the account.

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