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NISM Certifications · NISM-Series-VI: Depository Operations · Special Services - Debt Instruments and Government Securities

Mr. Iyer wants to pledge his demat holding of corporate bonds as collateral for a loan. Which statement about the corporate debt securities in demat form is correct?

Corporate bonds held in demat form can be pledged through the depository's standard pledge process, where both pledgor and pledgee have demat accounts. No physical certificate is delivered and the facility is not limited to equity shares.

  1. ADebt securities in demat form cannot be pledged
  2. BPledge is possible only for equity shares
  3. CPledge is created by the borrower and lender as per the depository's pledge procedures, as with other securities in demat formCorrect
  4. DPledge requires physically delivering a certificate to the lender

Explanation

Dematerialised debt securities can be pledged using the depository's pledge facility, with the pledgor and pledgee both having demat accounts and following the depository's procedures. The other statements are incorrect because no physical certificate is involved and equity is not the only eligible security.

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