Special Services – Debt Instruments & Government Securities
6 questions. Each answer is explained.
Question 1 of 6Practice · Series VI — Depository Operations
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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 – Account Operations14
- 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
- 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 If a rule changes before your exam, treat the linked questions as out of date and check NISM's current workbook.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 6 questions on Special Services – Debt Instruments & Government Securities, with answers
Q1Which pair consists of debt/money-market securities that can be admitted to electronic holding, rather than ordinary bank-account balances?
Option A. A bank recurring deposit and a savings deposit
Why it is wrong: Deposit account products should not be equated with tradable CDs or CP solely because both involve money.
Option B. A savings deposit and a current-account balance
Why it is wrong: Ordinary bank balances are not the admitted securities asked for.
Option C. A dividend bank mandate and an account statement
Why it is wrong: Instructions and statements are administrative records, not debt securities.
Option D. Certificates of Deposit and Commercial Paper — Correct answer
Answer: D. Certificates of Deposit and Commercial Paper are securities included among the debt instruments supported under the depository’s admission framework. Ordinary savings and current accounts are bank relationships rather than securities identified by an admitted ISIN. Electronic holding still requires the relevant instrument to be admitted and correctly identified. Remember: Distinguish a security from a bank-account balance or an account document.
Hint, shown before you answer in practice mode: Common mistake: Assuming any financial balance can be credited as a demat instrument.
VI-135easyconceptual
Q2A client submits government-security holdings with two different ISINs/loan codes for dematerialisation into CDSL. How should the request forms be organised?
Option A. Use a single form and omit the loan codes
Why it is wrong: Omitting the identifying codes prevents issue-level verification.
Option B. Choose one loan code to represent both securities
Why it is wrong: One valid code cannot represent a different issue.
Option C. Use a separate DRF-GS for each ISIN/loan code — Correct answer
Option D. Combine the securities only by their total face value
Why it is wrong: An aggregate rupee amount does not replace instrument-level records.
Answer: C. The government-securities process requires separate DRF-GS requests for different ISINs or loan codes. Different issues can have different terms, balances and servicing records even when they share the same sovereign issuer. Total face value alone cannot identify which instruments are being converted. Remember: Reconcile government securities by issue, not only by issuer or aggregate amount.
Hint, shown before you answer in practice mode: Common mistake: Treating all government borrowing as a single fungible security.
VI-136mediumconceptual
Q3An investor holds ₹2,00,000 face value of a fixed-rate government security with a 6% annual coupon paid in two equal half-yearly instalments. Ignoring tax, what is one half-year’s coupon?
Option A. ₹3,000
Why it is wrong: ₹3,000 divides the annual amount by four rather than two.
Option B. ₹6,000 — Correct answer
Option C. ₹12,000
Why it is wrong: ₹12,000 is the full year’s coupon.
Option D. ₹2,00,000
Why it is wrong: ₹2,00,000 is principal face value, not the periodic coupon.
Answer: B. Annual coupon is ₹2,00,000 × 6% = ₹12,000. Two equal half-yearly payments divide that annual amount by two, producing ₹6,000 each. The calculation uses face value and the specified annual coupon, not a fluctuating market price. Principal repayment is a separate event. Remember: Apply an annual coupon to face value, then allocate it to the stated payment frequency.
Hint, shown before you answer in practice mode: Common mistake: Paying a full annual coupon at each half-year date.
VI-137mediumnumerical
Q4An eligible investor moves government securities from its own SGL holding into its own depository holding without a purchase or sale consideration. Which term describes the stated movement?
Option A. Value-free transfer — Correct answer
Option B. A cash coupon payment
Why it is wrong: A coupon is a cash benefit, not the movement of the security itself.
Option C. Fresh auction allotment
Why it is wrong: No fresh issue or auction subscription is described.
Option D. Redemption at maturity
Why it is wrong: The security remains outstanding rather than being repaid and extinguished.
Answer: A. The government-securities FAQ describes a movement of the same owner’s securities without payment of consideration as a value-free transfer under the applicable arrangements. Ownership is being re-recorded in the receiving holding system rather than acquired from a seller. This does not dispense with instructions, account matching or issue-level verification. Remember: No sale consideration does not mean no recordkeeping or transfer controls.
Hint, shown before you answer in practice mode: Common mistake: Treating a change in holding location as a fresh investment transaction.
VI-138hardapplication
Q5A DP receives government-security certificates for the prescribed CDSL dematerialisation process. Should it automatically apply the ordinary equity-certificate defacing practice?
Option A. No. The DP should destroy the certificates itself instead of submitting them
Why it is wrong: Unauthorised destruction would prevent the prescribed verification and conversion.
Option B. Yes. Every financial certificate must always be defaced in exactly the same way
Why it is wrong: A general equity workflow must not override the special government-security instruction.
Option C. Yes. Defacing replaces the need to check the loan code of the government security
Why it is wrong: Defacing cannot substitute for verifying the exact issue.
Option D. No. The government-security procedure says these certificates must not be defaced — Correct answer
Answer: D. Government-security dematerialisation has its own documentary handling requirements. The cited CDSL FAQ specifically distinguishes these certificates from ordinary demat defacing practice. Staff must use the instrument-specific procedure rather than assume one cancellation method applies to every security. Remember: Instrument-specific handling requirements can override a familiar general workflow.
Hint, shown before you answer in practice mode: Common mistake: Applying ordinary equity demat handling mechanically to government-security certificates.
VI-139hardconceptual
Q6A BO holds 80 bonds, each with face value ₹1,000. The stated terms provide repayment at par at maturity. Interest is paid separately. What principal amount is repayable, ignoring default and deductions?
Option A. ₹88,000
Why it is wrong: ₹88,000 adds an unstated 10% amount.
Option B. ₹8,000
Why it is wrong: ₹8,000 is one-tenth of the stated principal.
Option C. ₹80,000 — Correct answer
Option D. ₹1,000
Why it is wrong: ₹1,000 covers only one of the 80 bonds.
Answer: C. At-par principal repayment uses the outstanding quantity multiplied by face value: 80 × ₹1,000 = ₹80,000. A secondary-market purchase price can differ from par, but it does not change the contractual redemption amount in this stated example. Interest must not be invented or added when it is expressly separate. Remember: Distinguish face-value redemption from market valuation and coupon payments.
Hint, shown before you answer in practice mode: Common mistake: Using the latest market price to compute a fixed at-par maturity obligation.
VI-140mediumnumerical
Special Services – Debt Instruments & Government Securities: common questions
How many practice questions are there on Special Services – Debt Instruments & Government Securities?
6 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 Special Services – Debt Instruments & Government Securities?
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.
Foreign Portfolio Investors (FPI)
4 questions on Foreign Portfolio Investors (FPI). Its quiz opens on that unit.
Open Foreign Portfolio Investors (FPI)