Unit study guide · NISM Series VI
Special Services – Debt Instruments & Government Securities
6 questions in this unit
What this unit covers
- Which pair consists of debt/money-market securities that can be admitted to electronic holding, rather than ordinary bank-account balances?
- A client submits government-security holdings with two different ISINs/loan codes for dematerialisation into CDSL. How should the request forms be organised?
- An 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?
- An 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?
- A DP receives government-security certificates for the prescribed CDSL dematerialisation process. Should it automatically apply the ordinary equity-certificate defacing practice?
- A 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?
Key ideas
From the practice bank · 1
Which pair consists of debt/money-market securities that can be admitted to electronic holding, rather than ordinary bank-account balances?
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 Common mistake: Assuming any financial balance can be credited as a demat instrument.
VI-135From the practice bank · 2
A client submits government-security holdings with two different ISINs/loan codes for dematerialisation into CDSL. How should the request forms be organised?
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 Common mistake: Treating all government borrowing as a single fungible security.
VI-136From the practice bank · 3
An 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?
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 Common mistake: Paying a full annual coupon at each half-year date.
VI-137From the practice bank · 4
An 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?
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 Common mistake: Treating a change in holding location as a fresh investment transaction.
VI-138From the practice bank · 5
A DP receives government-security certificates for the prescribed CDSL dematerialisation process. Should it automatically apply the ordinary equity-certificate defacing practice?
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 Common mistake: Applying ordinary equity demat handling mechanically to government-security certificates.
VI-139From the practice bank · 6
A 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?
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 Common mistake: Using the latest market price to compute a fixed at-par maturity obligation.
VI-140