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

A DP wants to close a client's demat account on the DP's initiative because the client has not paid charges. Which statement is correct as per standard procedure?

A DP closing an account on its own initiative must give the client 30 days' written notice under the DP-BO agreement and ensure the balances are transferred as the client instructs. It cannot close the account immediately without notice or wait for a court order.

  1. AThe DP may close it immediately without notice
  2. BThe DP must give the client 30 days' notice before closing, and balances must be transferred or dealt with as instructedCorrect
  3. CThe DP may close only with the depository's physical visit
  4. DThe DP can close it only after a court order

Explanation

The DP–BO agreement permits either party to terminate with prior written notice of 30 days. Any securities remaining must be transferred to another account as the client directs. Immediate closure without notice breaches the agreement.

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