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

A DP receives an instruction to freeze a BO account for debits only, from the BO himself, because of a suspected compromise of his slips. Which statement correctly describes the effect once the freeze is active?

With a debit freeze, no debits can be made from the account, but credits such as incoming shares or corporate benefits are still accepted. Blocking both would require a total freeze, and a credit-only freeze is the reverse arrangement.

  1. ACredits can still be received but no debits can be made from the frozen accountCorrect
  2. BNeither debits nor credits are allowed
  3. CDebits are allowed but credits are blocked
  4. DOnly the pledged holdings are blocked

Explanation

A 'debit freeze' stops all debits from the account while still allowing credits such as bonus shares or purchases. A freeze for both debits and credits would be a total freeze. The reverse of the stated option is a credit freeze, so it does not describe a debit freeze.

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