NISM Certifications · NISM-Series-VI: Depository Operations · Special Services - Pledge and Hypothecation
Mr. Iyer wants to raise a loan against his demat shares held with a depository participant. In depository terminology, the person who creates the pledge by offering the securities as collateral is called the:
The borrower who offers demat securities as collateral is the pledgor. The lender who accepts the securities as security is the pledgee. The pledgor remains the owner of the securities while they are pledged, and the pledgee gets a lien over them.
- APledgorCorrect
- BPledgee
- CRegistrar
- DClearing member
Explanation
In a pledge, the BO who offers securities as security for a loan is the pledgor, while the lender who accepts them is the pledgee. The registrar and clearing member have no such role in creating a pledge.
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