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NISM Certifications · NISM-Series-VI: Depository Operations · Foreign Portfolio Investors (FPI)

A registered FPI wants to open a demat account in India for holding its securities. Which statement is correct?

An FPI must hold its Indian securities in dematerialised form in a demat account with a depository participant, and it must appoint a domestic custodian for its transactions. Physical holding or holding through an Indian representative's name is not the prescribed route.

  1. AIt may open multiple demat accounts with any number of DPs without restriction
  2. BIt must open its demat account with a DP and the custodian must be appointed for its transactionsCorrect
  3. CIt need not open a demat account since securities are held in physical form
  4. DIt can hold securities only in the name of its Indian representative

Explanation

FPIs must appoint a domestic custodian and hold securities in dematerialised form through a DP account. Physical holding is not the norm, and holdings are in the FPI's own name, so the other options are wrong.

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