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

Ms. Kapoor holds 1,000 shares in her demat account. She wants to prevent any debit from the account while still allowing credits to come in, for example because of suspected fraud. Which facility is most suitable?

Freezing the account for debits is most suitable. Under the freeze facility a BO can restrict debits while credits continue to be accepted. Closing the account, pledging shares or changing the account type do not provide this protection against unauthorised debits.

  1. AFreezing of the account for debits onlyCorrect
  2. BClosing the account
  3. CPledging all the shares to the DP
  4. DConverting the account into a basic services demat account

Explanation

A BO can request a freeze of the account or specific ISINs, and the freeze may be for debits only, so that credits can still be received. Closure ends the account, pledge creates a lien in favour of a lender, and a BSDA is a low-cost account type, not a debit restriction.

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