NISM Certifications · NISM-Series-VI: Depository Operations · Special Services - Pledge and Hypothecation
Ms. Kavita wants to pledge her demat shares to a bank. In which account type must the pledged securities be held before the pledge instruction is initiated?
The shares must be in Ms. Kavita's own demat account as free balance. Only unencumbered dematerialised securities can be marked for pledge; physical shares or those lying in a pool account cannot be pledged through the depository.
- AThey must be in her demat account with sufficient free balanceCorrect
- BThey must be in a margin account of the clearing member
- CThey must be in physical form with the issuer
- DThey must be in the DP's pool account
Explanation
Only securities with free (unencumbered) balance in the client's demat account can be pledged. Securities already locked, in a pool account or in physical form cannot be pledged through the depository system.
Did you get it right without looking?
One question tells you little. A timed set on Special Services - Pledge and Hypothecation shows your real accuracy, how long you take and where you lose marks.
More Special Services - Pledge and Hypothecation questions
- A pledgor has defaulted on a loan. The pledgee wants to realise the security. Which action does the pledgee initiate through its DP?
- A pledgor wants to close a pledge after repaying the loan. Which statement describes the standard procedure?
- Mr. Sanjay pledged 1,000 shares of a company to a bank. The company later announces a bonus issue and a cash dividend while the shares remai…
- Mr. Rao has pledged 500 shares with a lender and wishes to close the pledge after repaying the loan. Which statement is correct?
- A beneficial owner has pledged shares under the depository pledge facility. Which statement correctly describes the position of the securiti…
- Mr. Raman pledged 500 shares of an Indian company with a bank, and the pledge was confirmed. During the pledge, the company declares a cash …