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NISM Certifications · NISM-Series-VI: Depository Operations · Introduction to the Indian Capital Market

Before dematerialisation, a trader, Mr. Imran Qureshi, faced delays and risks of bad delivery when transferring physical share certificates. Which problem was NOT a typical issue of the physical certificate system?

Instant electronic settlement through book entries was not a problem of physical certificates; it is the advantage that depositories brought. Physical shares suffered from forgery, theft, delays in transfer and bad delivery caused by signature mismatches, which dematerialisation largely removed.

  1. AForgery and theft of certificates
  2. BDelays in transfer and registration
  3. CInstant electronic settlement through book entriesCorrect
  4. DBad delivery due to signature mismatch

Explanation

Physical certificates carried risks of forgery, theft, loss, delay and bad delivery from signature mismatch. Instant book-entry transfer is the benefit of the depository system, not a problem of the physical system.

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