Processes Related to Depositories
10 questions. Each answer is explained.
Question 1 of 10Practice · Series II-A — Registrars to an Issue and Share Transfer Agents - Corporate
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Learn these topics
More units in NISM Series II-A
- Introduction to Securities10
- Characteristics of Equity Shares10
- Characteristics of Debt Securities10
- Characteristics of Other Securities10
- Basics of Mutual Funds10
- SEBI – Role and Regulations10
- Public Offer of Securities10
- Modes of allotment of shares other than Public Offers10
- Processes related to Public Offering of Shares10
- Roles and Responsibilities in a Public Issue10
- Depository Services10
- Investor Interface with the R&T Agent10
- Secondary Market Transactions10
- Client Servicing10
Exam format
| Questions | 100 · 1 mark each |
|---|---|
| Duration | 120 min · 2 hours |
| Pass mark | 50% · 50 of 100 marks |
| Negative marking | None · a wrong answer costs nothing beyond the mark |
| Certificate validity | 3 years · from the date of the examination |
| Marks for this unit | 16 of 100 marks (16%) |
Source: March 2025 Annexure I, Unit 12: Processes related to Depositories
NISM Series II-A Registrars to an Issue and Share Transfer Agents - Corporate
Exam rules read on NISM's site on 31 October 2026. Check the current rules on NISM's site (opens in a new tab)
What these answers assume, and when it was last checked
Each question uses the rules listed below. We last checked them on 5 September 2026. A Budget or SEBI circular can change a rate, lot size or expiry day. If a rule changes before your exam, treat the linked questions as out of date and check NISM's current workbook.
- NSE uses Tuesday expiry and BSE uses Thursday expiry. This applies from 1 September 2025.
- The January 2026 index lot sizes are NIFTY 65, BANKNIFTY 30, FINNIFTY 60, MIDCPNIFTY 120 and NIFTYNXT50 25.
- The October 2024 SEBI framework sets a minimum index contract value of Rs 15–20 lakh. Each exchange may list one weekly benchmark index.
- Option buyers pay the premium upfront from 1 February 2025. A short index option has an extra 2% Extreme Loss Margin on expiry day from 20 November 2024.
- Equity short-term capital gains are taxed at 20%. Long-term gains are taxed at 12.5% above Rs 1.25 lakh. Both rates apply from 23 July 2024.
- F&O income is non-speculative business income in ITR-3. NSE equity derivatives trade from 9:15 a.m. to 3:40 p.m.
- The final ten-minute session began on 3 August 2026. It aligns with the cash market Closing Auction Session.
- Most Securities Transaction Tax questions test the base and who pays. On an option sale, it is the premium and the seller pays. On a futures sale, it is the traded value and the seller pays.
- On exercise, Securities Transaction Tax uses intrinsic value: settlement price minus strike price. The buyer pays it.
- Two questions test the current rate. From 1 April 2026, option sales carry 0.15% on the premium and futures sales carry 0.05% on traded price. The earlier rates were 0.10% and 0.02% from 1 October 2024.
- This section uses the T+1 rolling settlement cycle. Obligations are fixed on T+1. A short delivery goes to buy-in auction on T+1 and settles on T+2.
- The trade-for-trade surveillance segment uses direct close-out. Funds pay in by 10:30 a.m. and pay out on or after 1:30 p.m. on settlement day.
- Securities pay in to the settlement pool by 10:30 a.m. They pay out directly to the client’s demat account by 3:30 p.m.
- The 3:30 p.m. deadline replaced 1:30 p.m. under SEBI’s 10 October 2024 circular. Direct client credit was required by SEBI’s 5 June 2024 circular.
- The optional T+0 cycle trades until 1:30 p.m. Obligations are fixed by 2:30 p.m. on the trade day. An early pay-in shortage is closed out directly.
- Cash-market Value at Risk margin is six times exponentially weighted moving-average volatility. It has a 9% floor for Group I, a 21.5% floor for Group II, and a fixed 50% or 75% level for Group III.
- Extreme Loss Margin is 3.5% for a share and 2% for a broad-market-index exchange traded fund. Mark-to-market margin is collected before the next day’s trading. The trade-for-trade segment has 100% upfront margin.
- Close-out uses the higher of the highest price from trade day to auction day and 20% above the auction day’s official close.
- A funds shortage costs 0.07% a day. The trading facility is withdrawn at a shortage of Rs 5 lakh or more.
- SCORES allows 21 calendar days, then two 15-day review levels. Online Dispute Resolution moves from conciliation to arbitration after the market participant and SCORES steps.
- At NSE, the Investor Protection Fund limit is Rs 35 lakh per investor for each defaulting or expelled member. This applies to claims arising after 13 August 2024.
- A Basic Services Demat Account has no annual maintenance charge up to Rs 4 lakh of holdings. It costs up to Rs 100 above that, until the Rs 10 lakh eligibility ceiling. These slabs apply from 1 September 2024.
- The rupee pairs are USD-INR, EUR-INR, GBP-INR and JPY-INR. The cross-currency pairs are EUR-USD, GBP-USD and USD-JPY.
- Each contract covers 1,000 units of the foreign currency, except JPY-INR. JPY-INR covers 100,000 yen and is quoted in rupees per 100 yen.
- The tick is 0.25 paise, or Rs 0.0025. It equals Rs 2.50 a contract.
- Rupee pairs trade from 9:00 a.m. to 5:00 p.m. A monthly contract stops trading at 12:30 p.m. two working days before the expiry month’s last business day.
- Final settlement is in cash at the FBIL reference rate on expiry day. FBIL, Financial Benchmarks India, has published this rate in place of the Reserve Bank since 2018. Premium-style European options are quoted in rupees. The buyer pays the premium in cash on T+1.
- Daily settlement is on T+1 and final settlement is on T+2.
- NSE Clearing circular 026/2020 sets SPAN margin plus Extreme Loss Margin. The futures margin is 0.50% for USD-INR, 0.15% for EUR-INR, 0.25% for GBP-INR and 0.35% for JPY-INR. A short option has 0.75%. These figures apply from 1 June 2020.
- A USD-INR client may hold 6% of total open interest or USD 20 million, whichever is higher. A trading member may hold 15% or USD 100 million.
- A resident user has one USD 100 million equivalent limit across all rupee pairs and exchanges. No document is needed below that limit, but a valid underlying contracted exposure must still exist. This clarification applies from 3 May 2024.
- The currency segment has no Securities Transaction Tax.
The exam figures (questions, time, pass mark, negative marking and certificate validity) come from NISM's own pages, read on 31 October 2026. Timed practice uses the same figures. Study with the official workbook as well.
The written-out answers on this page are hidden while your timed set runs.
All 10 questions on Processes Related to Depositories, with answers
Q1What does rematerialisation normally mean in the securities holding process?
Option A. Replacing lost certificate evidence for a physical holding
Why it is wrong: Replacement of lost evidence is a separate service process from converting an electronic holding back to physical form.
Option B. Moving securities between two existing demat accounts
Why it is wrong: An account-to-account transfer changes the holding location rather than necessarily changing it into physical form.
Option C. Converting eligible electronic holdings into physical certificates — Correct answer
Option D. Converting physical certificates into eligible electronic holdings
Why it is wrong: Conversion from physical to electronic form is dematerialisation, the opposite direction.
Answer: C. Rematerialisation converts eligible electronic securities holdings back into physical certificate form through the prescribed process. Remember: Rematerialisation changes the form of an eligible holding rather than its owner.
Hint, shown before you answer in practice mode: This process reverses the usual change from paper holding to electronic holding. Common mistake: Confusing a reverse holding-form process with a market sale.
II-A-111easyconceptual
Q2Which transfer is an off-market transfer in the depository context?
Option A. A securities transfer outside exchange clearing and settlement — Correct answer
Option B. Any purchase of a security solely because it is listed
Why it is wrong: Listed status does not determine whether a particular transfer uses the exchange settlement route.
Option C. Every movement of cash between two bank accounts
Why it is wrong: A cash transfer between banks is not a demat securities transfer.
Option D. Every exchange trade executed after the normal morning session
Why it is wrong: Time of day does not by itself make an exchange trade an off-market transfer.
Answer: A. An off-market transfer occurs outside the exchange clearing and settlement process, such as an eligible direct transfer between demat accounts. Remember: Off-market refers to the transfer route, not necessarily to whether the security is listed.
Hint, shown before you answer in practice mode: The distinction concerns whether the transfer passes through the exchange transaction-settlement route. Common mistake: Assuming a listed share can move only through an exchange trade.
II-A-112easyconceptual
Q3When securities move between eligible accounts maintained through different depositories, what type of delivery is involved?
Option A. Rematerialisation of securities
Why it is wrong: Rematerialisation changes electronic holding into physical form.
Option B. Transmission of securities
Why it is wrong: Transmission concerns a change by operation of law rather than the identity of the depository systems.
Option C. Inter-depository delivery — Correct answer
Option D. Intra-depository delivery
Why it is wrong: Intra-depository delivery stays within the same depository system rather than crossing between depositories.
Answer: C. Inter-depository delivery moves eligible securities between accounts maintained through different depositories. Remember: Inter-depository delivery links accounts across depository systems.
Hint, shown before you answer in practice mode: The two accounts belong to different depository systems. Common mistake: Treating a change of depository as a new corporate action.
II-A-113easyconceptual
Q4An investor submits physical certificates for dematerialisation. Why should the RTA validate the certificates and holder details before confirmation?
Option A. To increase the company’s issued capital by the same quantity
Why it is wrong: Converting existing shares into electronic form does not itself add new issued capital.
Option B. To turn every partly paid share into a fully paid share
Why it is wrong: Changing holding form does not automatically pay outstanding share capital.
Option C. To guarantee the highest possible market sale price
Why it is wrong: Dematerialisation validation does not guarantee a trading price.
Option D. To ensure a genuine holding is credited to the proper account — Correct answer
Answer: D. The RTA validates the documents and holder details to ensure that a genuine holding is credited to the proper account. Remember: Dematerialisation confirmation requires checks on the security and its rightful holder.
Hint, shown before you answer in practice mode: Confirmation should establish entitlement and authenticity rather than create new investment value. Common mistake: Approving electronic credit merely because a certificate was submitted.
II-A-114mediumapplication
Q5An issuer needs to determine which demat holders qualify for a record-date corporate action. Which information should the RTA use?
Option A. Only the previous financial year’s printed shareholder list on file
Why it is wrong: An old annual list can miss ownership changes before the relevant record date.
Option B. The highest intraday trading volumes recorded in the share on exchanges
Why it is wrong: Trading volume does not identify which beneficial owners hold the entitlement.
Option C. The relevant beneficial-owner position supplied through the depositories — Correct answer
Option D. Only investors who telephone the RTA before the payment date arrives
Why it is wrong: Making a telephone call does not itself establish eligibility.
Answer: C. The RTA should use the relevant beneficial-owner position supplied through the depositories to determine record-date entitlements. Remember: Corporate-action processing needs the correct date-specific ownership records.
Hint, shown before you answer in practice mode: Eligibility must be linked to the relevant ownership snapshot, not to who contacts the office first. Common mistake: Using the most convenient list instead of the relevant ownership snapshot.
II-A-115mediumapplication
Q6An eligible holder is due 400 bonus shares. A verified posting has credited only 250. How many additional shares are needed to complete the entitlement?
Option A. 400 shares
Why it is wrong: 400 additional shares would credit the whole entitlement again.
Option B. 150 shares — Correct answer
Option C. 250 shares
Why it is wrong: 250 shares is the credit already posted, not the remaining entitlement.
Option D. 650 shares
Why it is wrong: 650 shares adds the entitlement and existing credit instead of finding the shortfall.
Answer: B. An additional 150 shares are needed. Calculation: 400 shares due − 250 already credited = 150 shares. Remember: Correct only the verified missing balance and avoid duplicate credits.
Hint, shown before you answer in practice mode: Compare the verified credit with the total entitlement before making any corrective posting. Common mistake: Reposting the entire entitlement after a partial credit.
II-A-116mediumnumerical
Q7A merger gives three acquiring-company shares for every seven target-company shares. What new allotment is due on 700 eligible target shares?
Option A. 300 shares — Correct answer
Option B. 1,633.33 shares
Why it is wrong: 1,633.33 shares reverses the three-for-seven ratio.
Option C. 100 shares
Why it is wrong: 100 shares omits the three-share numerator in the exchange ratio.
Option D. 2,100 shares
Why it is wrong: 2,100 shares multiplies by three without dividing by seven.
Answer: A. The merger allotment is 300 acquiring-company shares. Calculation: 700 ÷ 7 × 3 = 300 shares. Remember: Merger allotments follow the approved exchange ratio.
Hint, shown before you answer in practice mode: Apply the approved share-exchange ratio in the stated direction. Common mistake: Applying the merger ratio in reverse.
II-A-117mediumnumerical
Q8Before dematerialising a listed company’s newly issued securities, what listing-related check does the RTA code of conduct require?
Option A. Use the highest past exchange price as permission
Why it is wrong: A past market price is not an exchange permission.
Option B. Treat payment of an RTA fee as exchange approval
Why it is wrong: Paying an RTA fee does not replace listing permission.
Option C. Assume the issuer’s earlier listing covers every new security
Why it is wrong: An issuer’s existing listing does not by itself prove permission for every newly issued security.
Option D. Verify that the securities have listing permission — Correct answer
Answer: D. The RTA must verify listing permission for the securities being dematerialised under the specific listing-related duty in its code of conduct. Remember: Confirm required permissions for the particular securities being processed.
Hint, shown before you answer in practice mode: Approval for an earlier issue and approval for the securities now being processed are not necessarily identical. Common mistake: Assuming a company-level listing automatically validates every later issue.
II-A-118mediumregulatory
Q9Issued capital comprises 15 lakh shares. Reconciled records show 7 lakh with one depository, 6 lakh with another and 1.8 lakh physical. What unexplained gap remains?
Option A. 1,80,000 shares
Why it is wrong: 1,80,000 shares is the physical holding total, not the reconciliation gap.
Option B. 14,80,000 shares
Why it is wrong: 14,80,000 shares is the recorded total rather than the missing balance.
Option C. 20,000 shares — Correct answer
Option D. 2,00,000 shares
Why it is wrong: 2,00,000 shares is a factor-of-ten conversion error.
Answer: C. The unexplained shortfall is 20,000 shares. Recorded shares = 7 lakh + 6 lakh + 1.8 lakh = 14.8 lakh. Difference = 15 lakh − 14.8 lakh = 0.2 lakh = 20,000 shares. Remember: An unexplained capital-reconciliation difference needs investigation, not a balancing credit.
Hint, shown before you answer in practice mode: Add the three recorded categories before comparing them with the issued-share total. Common mistake: Confusing the total of one holding category with the reconciliation difference.
II-A-119hardnumerical
Q10A holder has 100 shares of ₹10 face value. A one-for-four bonus is completed, then every share splits into five ₹2 shares. What is the final holding?
Option A. 625 shares — Correct answer
Option B. 125 shares
Why it is wrong: 125 shares stops after the bonus issue and ignores the split.
Option C. 2,000 shares
Why it is wrong: 2,000 shares treats the bonus ratio as multiplication by four.
Option D. 500 shares
Why it is wrong: 500 shares applies the split only to the original shares and ignores the bonus.
Answer: A. The final holding is 625 shares. Bonus shares = 100 ÷ 4 = 25. Post-bonus holding = 125. After the five-for-one split, quantity = 125 × 5 = 625 shares. Remember: For successive corporate actions, carry the updated holding into the next calculation.
Hint, shown before you answer in practice mode: Apply the second action to the holding after the first action is completed. Common mistake: Applying every action independently to the original holding.
II-A-120hardnumerical
Processes Related to Depositories: common questions
How many practice questions are there on Processes Related to Depositories?
10 questions, all written out on this page with the correct answer and why each other option is wrong. This unit is one of the 15 practice topics for NISM Series II-A, which has 150 questions in total.
Are these real NISM Series II-A questions on Processes Related to Depositories?
No. LearnNifty wrote every question from NISM's public syllabus. NISM does not publish its question bank, so nobody can offer you the real paper. Use these questions to check that an idea has gone in. Use the official NISM workbook to see what is examined.
How much of the NISM Series II-A exam is Processes Related to Depositories?
NISM's published syllabus outline gives it 16 of the paper's 100 marks, or 16% of the exam. It is quoted from the outline, not estimated. The published unit it comes from: March 2025 Annexure I, Unit 12: Processes related to Depositories
Does negative marking apply to NISM Series II-A?
No. NISM applies no negative marking to Series II-A. A wrong answer costs nothing beyond the mark you did not earn, so a blank is never better than an attempt. Timed practice here uses the same rule.
Are these practice questions kept up to date?
Each question is written against the rules printed on this page, last checked on 5 September 2026. A Budget or a SEBI circular can change a rate, a lot size or an expiry day. If one of those rules changes before your exam, treat the questions that use it as out of date. Then check NISM's current workbook.
Investor Interface with the R&T Agent
10 questions on Investor Interface with the R&T Agent. Its quiz opens on that unit.
Open Investor Interface with the R&T AgentPaper Trading Try it on the practice trading desk