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NISM Certifications · NISM-Series-VI: Depository Operations · Introduction to Depository

Ms. Kavita Rao holds shares in physical form and wishes to hold them in electronic form. Which Indian law, by providing for the dematerialisation of securities and free transferability, created the legal basis for depositories in India?

The Depositories Act, 1996 is the law that created the legal basis for depositories in India. It permits securities to be dematerialised and transferred by electronic book entry, and sets out the rights and obligations of depositories, participants, issuers and beneficial owners.

  1. AThe Depositories Act, 1996Correct
  2. BThe Banking Regulation Act, 1949
  3. CThe Indian Contract Act, 1872
  4. DThe Negotiable Instruments Act, 1881

Explanation

The Depositories Act, 1996 provides the framework for depositories, dematerialisation, and electronic transfer of securities by book entry. The other statutes govern banking, contracts and negotiable instruments, not depositories.

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