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NISM Certifications · NISM-Series-VI: Depository Operations · Special Services - Debt Instruments and Government Securities

On maturity of a demat debenture, how does the investor typically receive the redemption proceeds?

The issuer, through its registrar or paying agent, pays the redemption amount to holders on record as per the depository's beneficiary position, and the debentures are then extinguished from the demat accounts. The DP and depository do not pay from their own funds.

  1. AThe issuer or its registrar pays the amount to the holders on the record date, and the debentures are extinguished from the demat accountsCorrect
  2. BThe investor must surrender a physical certificate at the DP
  3. CThe DP pays the amount from its own funds
  4. DThe depository pays redemption from the investor protection fund

Explanation

Redemption is paid by the issuer through its registrar or paying agent to holders identified from the depository's beneficiary position, and the securities are then extinguished by debit from accounts. The DP and the depository do not pay it from their own funds.

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