Functions of Depository Participant – Account Operations
14 questions. Each answer is explained.
Question 1 of 10Practice · Series VI — Depository Operations
0 right · 0 wrong · 10 to go
A–D or 1–4 to answer · Enter or → for the next question · ← to go back
Learn these topics
More units in NISM Series VI
- Introduction to the Indian Capital Market8
- Introduction to Depository12
- Depository and its Business Partners10
- Functions of Depository Participant – Account Opening18
- Functions of Depository Participant – Transmission and Nomination14
- Functions of Depository Participant – Dematerialisation18
- Functions of Depository Participant – Trading and Settlement16
- Special Services – Pledge & Hypothecation12
- Special Services – Public Offering / Corporate Actions12
- Special Services – Debt Instruments & Government Securities6
- Foreign Portfolio Investors (FPI)4
- Investor Services6
Exam format
| Questions | 100 · 1 mark each |
|---|---|
| Duration | 120 min · 2 hours |
| Pass mark | 60% · 60 of 100 marks |
| Negative marking | 25% · 0.25 marks off per wrong answer |
| Certificate validity | 3 years · from the date of the examination |
| Marks for this unit | Not published by NISM |
NISM Series VI Depository Operations
Exam rules read on NISM's site on 3 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 If a rule changes before your exam, treat the linked questions as out of date and check NISM's current workbook.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 3 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 14 questions on Functions of Depository Participant – Account Operations, with answers
Q1An individual is the sole holder of one demat account and the first holder of another. Each holds ₹1 lakh of ordinary equity. Does the low combined value alone make the individual eligible for BSDA treatment?
Option A. No. The sole or first-holder account condition must also be met — Correct answer
Option B. Yes. Only the total value of holdings across both accounts matters
Why it is wrong: The value limit is not the only condition.
Option C. No. A BSDA is not available to individual investors at all
Why it is wrong: BSDA is specifically designed for eligible individual investors.
Option D. Yes. Each DP may ignore the account the investor holds elsewhere
Why it is wrong: Eligibility is not determined by pretending accounts at other providers do not exist.
Answer: A. BSDA eligibility combines the holding-value test with account-ownership conditions. An individual must have only one demat account as sole or first holder and only one BSDA across depositories. In this example, low value does not cure having two accounts in the relevant ownership positions. Being a second holder elsewhere is a different fact and should not be confused with the stated case. Remember: Apply every BSDA eligibility condition, not just the value ceiling.
Hint, shown before you answer in practice mode: Common mistake: Approving BSDA solely because the account balance is small.
VI-049mediumapplication
Q2An otherwise eligible individual has ₹6.2 lakh of equity and ₹4.1 lakh of debt securities in the same account. None is excluded from BSDA valuation. What holding value is used for the current ₹10 lakh BSDA eligibility ceiling?
Option A. ₹6.2 lakh, because debt is ignored
Why it is wrong: Debt is included unless it falls into a specific excluded class.
Option B. ₹6.2 lakh, because only the larger category counts
Why it is wrong: There is no larger-category-only rule.
Option C. ₹4.1 lakh, because equity is ignored
Why it is wrong: Ordinary equity is not omitted from the calculation.
Option D. ₹10.3 lakh, which exceeds the ceiling — Correct answer
Answer: D. The present BSDA test uses debt and other securities together. The eligible-value total is ₹6.2 lakh + ₹4.1 lakh = ₹10.3 lakh, above ₹10 lakh. Applying separate ceilings to debt and equity would incorrectly keep this account within the scheme. Regular-account treatment may therefore apply under the prescribed process. Remember: Combine the relevant debt and non-debt holdings before testing the BSDA ceiling.
Hint, shown before you answer in practice mode: Common mistake: Treating the ₹10 lakh limit as available separately for each asset class.
VI-050mediumnumerical
Q3Assume two otherwise eligible BSDAs remain in their stated valuation bands throughout the charging period. Account P holds ₹4 lakh and Account Q holds ₹7 lakh. What are their respective maximum annual maintenance charges, excluding any separately applicable tax?
Option A. P: nil. Q: ₹100 — Correct answer
Option B. P: nil. Q: ₹200
Why it is wrong: The specified maximum in Q’s band is ₹100, not ₹200.
Option C. P: ₹100. Q: ₹200
Why it is wrong: This misclassifies P and doubles Q’s maximum.
Option D. P: ₹100. Q: ₹100
Why it is wrong: Exactly ₹4 lakh is still in the nil-AMC band.
Answer: A. The current table places holdings up to and including ₹4 lakh in the nil-AMC band. Holdings above ₹4 lakh and up to ₹10 lakh have a maximum AMC of ₹100. Thus P is at the inclusive upper boundary of the zero-charge band, while Q is in the next band. This is an AMC rule, not a statement that every service is free. Remember: Check whether a threshold includes equality before assigning the fee band.
Hint, shown before you answer in practice mode: Common mistake: Charging the next band at exactly ₹4 lakh.
VI-051mediumconceptual
Q4For a BSDA eligibility check, ordinary included securities are worth ₹9 lakh and separately held Zero Coupon Zero Principal bonds are shown at ₹2 lakh. Assume all other conditions are met. Under the current exclusion rule, what is the relevant eligibility value?
Option A. ₹9 lakh — Correct answer
Option B. Nil
Why it is wrong: The ₹9 lakh of ordinary included securities still counts.
Option C. ₹11 lakh
Why it is wrong: This includes the specifically excluded ZCZP bonds.
Option D. ₹2 lakh
Why it is wrong: This counts only the excluded category and omits the ordinary holdings.
Answer: A. The current operating instructions exclude specified categories, including Zero Coupon Zero Principal bonds, from the BSDA eligibility valuation. The relevant total is therefore ₹9 lakh, not the ₹11 lakh displayed across both categories. The exclusion is a specific regulatory treatment. It does not mean all debt or all zero-coupon instruments are excluded. Remember: Apply named valuation exclusions narrowly. Do not extend them to unrelated instruments.
Hint, shown before you answer in practice mode: Common mistake: Reading “ZCZP bonds excluded” as “all debt securities excluded”.
VI-052hardnumerical
Q5At a scheduled review, a CDSL DP finds an existing regular account eligible for BSDA. The BO has not given authenticated, verifiable consent to remain in a regular account. What is the current prescribed approach?
Option A. Leave every account regular unless the BO visits a branch in person
Why it is wrong: A branch visit is not the stated precondition for the default conversion process.
Option B. Convert the account to a BSDA under the quarterly reassessment process — Correct answer
Option C. Ask the broker to give consent on the BO’s behalf, instead of the BO
Why it is wrong: The BO’s choice cannot be replaced by an unrelated broker preference.
Option D. Review eligibility only once, at the time when the account is first opened
Why it is wrong: Eligibility is reassessed rather than frozen at account opening.
Answer: B. The current instructions require reassessment at the end of every quarter and conversion of eligible accounts, unless the BO specifically consents through an authenticated and verifiable channel to continue with a regular account. The default treatment is not dependent on a compulsory branch visit. The customer’s recorded choice, where validly given, must be respected. Remember: Current BSDA administration combines periodic review with a documented customer opt-out.
Hint, shown before you answer in practice mode: Common mistake: Using an old once-a-year or opening-only review assumption.
VI-053mediumapplication
Q6An eligible BSDA has nil annual maintenance charges. Which conclusion about other charges is justified?
Option A. Nil AMC does not mean every other DP service is also free — Correct answer
Option B. Every debit transaction on the account must also be free
Why it is wrong: A zero annual fee does not automatically set every transaction fee to zero.
Option C. The issuer must pay back all the transaction taxes the BO pays
Why it is wrong: The issuer has no general reimbursement duty merely because the investor uses a BSDA.
Option D. The broker must waive all brokerage on the BO’s trades too
Why it is wrong: Brokerage is a different service charge.
Answer: A. AMC is one fee category. The BSDA framework separately addresses statements and other services. It does not abolish every DP charge, broker charge or statutory tax. Other-service charging must follow the applicable BSDA and tariff rules, including the requirement not to charge BSDAs more than comparable non-BSDA services. Remember: Read each tariff component separately.
Hint, shown before you answer in practice mode: Common mistake: Equating a basic-services account with an entirely cost-free securities relationship.
VI-054easyconceptual
Q7A joint demat account requires all holders’ signatures for a physical debit instruction. Only the first holder signs a transfer form. What should the DP do?
Option A. Execute because the first holder alone owns all the shares
Why it is wrong: First-holder position does not extinguish the other holders’ interests or the mandate.
Option B. Obtain the missing required signatures before executing the debit — Correct answer
Option C. Ignore the mandate if the quantity is small
Why it is wrong: Transaction size does not cancel the stated signing requirement.
Option D. Accept the recipient’s signature instead
Why it is wrong: A recipient’s signature does not supply the missing source-account authority.
Answer: B. The account’s valid operating requirements govern authority for the debit. In this scenario all holders’ signatures are explicitly required, so a first-holder signature alone is insufficient. First-holder status does not convert jointly held securities into that person’s sole property. The destination holder cannot authorise a debit from somebody else’s joint account. Remember: Check the actual operating mandate and completeness of authority.
Hint, shown before you answer in practice mode: Common mistake: Assuming the first name automatically has unrestricted debit power.
VI-055mediumapplication
Q8An NSDL client wants internet access primarily to view demat balances and transaction information. Which named facility is intended for that purpose?
Option A. IDeAS — Correct answer
Option B. A dematerialisation request to the issuer/RTA
Why it is wrong: Dematerialisation converts certificates. It is not the routine account-information service.
Option C. The issuer’s physical share-transfer register
Why it is wrong: The issuer’s physical register is not the NSDL client viewing facility.
Option D. SPEED-e used specifically to submit delivery instructions
Why it is wrong: This choice describes electronic instruction submission rather than the account-viewing facility asked for.
Answer: A. IDeAS is NSDL’s internet-based account-information facility. Viewing a balance is distinct from issuing a delivery instruction or applying for a corporate action. The user should not confuse access to account information with an unrestricted authority to move securities. Remember: Match an electronic service to its actual function.
Hint, shown before you answer in practice mode: Common mistake: Treating every online depository facility as a transaction-execution service.
VI-056easyconceptual
Q9An enrolled NSDL client wants to submit securities-delivery instructions electronically instead of delivering paper slips. Which facility most directly supports that activity?
Option A. An IPO application entered on the issuer’s behalf
Why it is wrong: A new-issue application is not the client delivery-instruction service.
Option B. IDeAS used only as an account-viewing facility
Why it is wrong: Viewing account data is different from submitting delivery instructions.
Option C. A read-only holding statement downloaded from the DP
Why it is wrong: A downloaded statement is evidence of a balance, not a transaction authority.
Option D. SPEED-e — Correct answer
Answer: D. SPEED-e enables electronic submission of depository instructions under its authentication and operating arrangements. The instruction must still be valid, within the user’s authority and subject to available balances and applicable restrictions. Electronic submission changes the channel. It does not exempt the transaction from controls. Remember: Digital delivery instructions still require authority and operational validation.
Hint, shown before you answer in practice mode: Common mistake: Believing an online instruction automatically bypasses pledge or freeze restrictions.
VI-057mediumconceptual
Q10Which description correctly distinguishes the principal functions of CDSL’s easi and easiest services?
Option A. easi is an exchange matching engine, while easiest is a clearing corporation for trades
Why it is wrong: A client-access service is not market infrastructure that matches or clears exchange trades.
Option B. Both are bank payment accounts for receiving dividends, rather than depository services
Why it is wrong: They are depository-related facilities, not bank accounts.
Option C. easi shows account information, while easiest also accepts electronic instructions — Correct answer
Option D. easi is used only for creating pledges, while easiest is used only for nomination
Why it is wrong: Those narrow descriptions do not capture the services’ purposes.
Answer: C. The services differ in functionality: easi is associated with viewing holdings and transactions, while easiest adds an electronic route for permitted securities instructions. Registration, authentication and the applicable configuration matter. Neither service turns a depository account into a bank account or substitutes for exchange trade matching. Remember: Distinguish information access from the additional ability to submit instructions.
Hint, shown before you answer in practice mode: Common mistake: Assuming a view-only registration authorises outward transfers.
VI-058mediumconceptual
Q11A BO receives a genuine depository debit alert for a transfer they did not authorise. What is the most appropriate immediate response?
Option A. Report it to the DP through a verified channel and seek protective action — Correct answer
Option B. Share the password and OTPs with a caller who promises to reverse the debit
Why it is wrong: Sharing credentials can enable additional misuse.
Option C. Assume the SMS alert itself proves the BO must have authorised the debit
Why it is wrong: A notification reports an event. It does not independently validate consent.
Option D. Wait until the next dividend is paid before raising the issue with anyone
Why it is wrong: Delay can make further unauthorised activity harder to contain.
Answer: A. An alert helps the BO detect activity promptly. It is not evidence that the underlying instruction was valid. The BO should preserve the details and immediately use the DP’s verified reporting process, including protective restrictions where appropriate. Credentials should not be shared with somebody claiming to reverse a debit. Remember: Use transaction alerts as a control, and report unrecognised activity promptly.
Hint, shown before you answer in practice mode: Common mistake: Treating automated notification as proof of customer authorisation.
VI-059mediumapplication
Q12A client loses an unused Delivery Instruction Slip booklet. What action best limits the risk of unauthorised paper instructions?
Option A. Tell the DP promptly so the lost unused slips can be blocked or cancelled — Correct answer
Option B. Do nothing until an actual debit appears in the account statement
Why it is wrong: Waiting sacrifices the preventive opportunity to block the lost instruments.
Option C. Sign all the blank slips in the new replacement booklet before storing them
Why it is wrong: Pre-signing blank slips increases rather than reduces risk.
Option D. Tell only the company that issued the shares and leave the DP uninformed
Why it is wrong: The DP, not just the issuer, needs the loss report to control instructions.
Answer: A. Unused instruction slips can be misused, particularly where signatures or details are compromised. The DP must be informed promptly so the relevant serials can be controlled and replacement procedures followed. Reporting to the issuer alone does not notify the intermediary that accepts and executes the client’s instructions. Remember: Protect instruction instruments before an unauthorised transaction occurs.
Hint, shown before you answer in practice mode: Common mistake: Treating a lost DIS booklet as harmless because the demat holdings are electronic.
VI-060mediumapplication
Q13An account statement begins with 700 shares. During the period, 150 shares are credited and 220 are debited. There are no other movements. What closing quantity should the BO expect?
Option A. 480 shares
Why it is wrong: 480 subtracts the debit but omits the credit.
Option B. 770 shares
Why it is wrong: 770 reverses the signs of the stated movements.
Option C. 630 shares — Correct answer
Option D. 1,070 shares
Why it is wrong: 1,070 adds both credits and debits instead of subtracting debits.
Answer: C. Closing quantity equals opening quantity plus credits minus debits: 700 + 150 − 220 = 630 shares. Credits increase holdings and debits reduce them. Reconciliation should use the same ISIN and period. Unrelated securities or unposted trade expectations should not be added to this ledger calculation. Remember: Reconcile holdings as an inventory: opening + credited − debited.
Hint, shown before you answer in practice mode: Common mistake: Adding a debit because the transaction line shows a positive quantity.
VI-061mediumnumerical
Q14An electronic transfer page times out after the client presses Submit. The transaction status is unknown. What is the safest processing step before sending an identical instruction again?
Option A. Check the acknowledgement or status to see if the first instruction was accepted — Correct answer
Option B. Submit the same instruction again and again until the browser shows success
Why it is wrong: Repeated submission can create multiple valid instructions.
Option C. Increase the quantity in the second instruction to make up for the delay
Why it is wrong: Delay does not justify changing the customer’s intended quantity.
Option D. Assume that every timeout means the first instruction was rejected by the system
Why it is wrong: The request and its acknowledgement can fail at different stages.
Answer: A. A timeout is a communication outcome, not a conclusive settlement status. The first request may have reached the system even though the acknowledgement did not reach the user. Checking status and reconciling the reference prevents duplicate debits while preserving a clear audit trail. A replacement should follow the prescribed process once the original state is established. Remember: Unknown status must be resolved before repeating a potentially effective instruction.
Hint, shown before you answer in practice mode: Common mistake: Equating a browser error with proof that no instruction exists.
VI-062hardapplication
Functions of Depository Participant – Account Operations: common questions
How many practice questions are there on Functions of Depository Participant – Account Operations?
14 questions, all written out on this page with the correct answer and why each other option is wrong. This unit is one of the 13 practice topics for NISM Series VI, which has 150 questions in total.
Are these real NISM Series VI questions on Functions of Depository Participant – Account Operations?
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.
Does negative marking apply to NISM Series VI?
Yes. NISM takes off 25% of a question's marks for a wrong answer. On a 1-mark question that is 0.25 marks off. A blank question earns nothing and loses nothing, so a wrong guess costs marks on this paper. 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.
Functions of Depository Participant – Transmission and Nomination
14 questions on Functions of Depository Participant – Transmission and Nomination. Its quiz opens on that unit.
Open Functions of Depository Participant – Transmission and Nomination