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

An FPI client asks the custodian whether it may hold Indian securities in a demat account opened with a depository participant. Which account arrangement is correct for an FPI?

An FPI must appoint a SEBI-registered custodian of securities and hold its Indian securities in dematerialised form through it. Physical holding is not allowed, and the basic services demat account is meant for small resident individuals, not FPIs.

  1. AIt must hold securities in dematerialised form through a custodian of securities registered with SEBICorrect
  2. BIt may keep securities in physical form with any broker
  3. CIt must hold securities only with a stock exchange
  4. DIt may hold securities in a basic services demat account (BSDA)

Explanation

FPIs must appoint a SEBI-registered custodian and hold securities in dematerialised form through it. Physical holding is not permitted, and BSDA is meant for small resident individual investors, not FPIs.

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