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NISM Certifications · NISM-Series-VI: Depository Operations · Functions of Depository Participant - Account Operations

Mr. Sunil Mehta wishes to close his demat account with a DP and has some securities still in the account. What must he do before the DP can close it?

He must first clear the securities balance by transferring holdings to another demat account or rematerialising them, and pay any dues, before submitting the closure request. The DP cannot close an account with holdings and does not sell securities on its own, nor does the issuer need to approve.

  1. ATransfer the securities to another account or rematerialise them, and clear dues, before submitting the closure requestCorrect
  2. BSimply submit the closure request, and the DP will sell the securities
  3. CWait for the issuer to approve the closure
  4. DConvert the account into a basic services demat account without any check

Explanation

A BO may close an account by submitting a closure request, but the account must have nil balance, so securities must first be moved to another BO account or rematerialised, and any dues cleared. The DP does not sell holdings on its own, and issuer approval is irrelevant.

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