NISM Series X-A Ch.17: Operational Aspects of Investment Management — 200 Practice Questions

Q: According to SEBI Regulations mentioned in the text, public issues exceeding what size must be issued only in dematerialised form?

Rs. 10 crores. The text specifies: 'SEBI Regulations requires all public issues whose size is in excess of Rs. 10 crores to be issued only in dematerialised form.'

Q: In the Register of Members (RoM) of a company, whose name is included in place of the investor to the extent of securities dematerialised?

The Depository's name. The text states: 'In the Register of Members (RoM) of the company, the depository’s name is included in the place of the investor to the extent of securities dematerialised.'

Q: As per the provided text, which of the following actions is a Power of Attorney (PoA) holder explicitly NOT allowed to perform?

Appointing a nominee for an investment.. Section 17.4 explicitly states, 'However, the attorney cannot appoint a nominee for the investment' and 'A PoA holder cannot make or change nominations in an account or investment.' Other options describe actions that a PoA holder is generally allowed to perform

Q: Which of the following is NOT one of the two depositories currently operational in India?

Securities and Exchange Board of India (SEBI). The text explicitly states, "There are currently two depositories operational in India, National Securities Depository Ltd. (NSDL) & Central Depository Services (I) Ltd. (CDSL)." SEBI is the regulatory body, not a depository

Q: If an NRI's investment in India was made from funds sourced in foreign currency, what is the repatriation status of the investment proceeds on sale or redemption of units?

It can be freely taken outside the country.. The text states, "If the source of funds for an NRI investment is foreign currency, it can be freely taken outside the country; that is, it is repatriable."

Q: Which of the following actions is an Attorney, holding a valid Power of Attorney (PoA), explicitly NOT permitted to perform on behalf of the grantor?

Appoint a nominee for an investment.. The text explicitly states: 'However, the attorney cannot appoint a nominee for the investment.' and later, 'A PoA holder cannot make or change nominations in an account or investment.' Other actions like purchase, sale, settlement, and initial investments are generally permitted based on the scope of the PoA

Multiple Choice Questions (175)

Q1 MCQ · 1 mark HardDematerialised Securities Features

Which statement accurately describes a characteristic of dematerialised securities?

AThey retain their distinctive identity in terms of share certificate or folio numbers.

BTheir ownership is described by the ISIN and a unique certificate number.

✓They are fungible, meaning they do not have a distinctive identity based on certificate or folio numbers.

DStamp duty is payable on dematerialisation, similar to other transfer of ownership transactions.

💡 The text states, 'The dematerialised securities are fungible. This means that once a share is dematerialised, it does not have a distinctive identity in terms of share certificate number or distinctive numbers or folio numbers.' It also explicitly states, 'However, no stamp duty is payable on dematerialisation unlike other transfer of ownership transactions.'

Q2 MCQ · 1 mark MediumDematerialisation Regulations

According to SEBI Regulations mentioned in the text, public issues exceeding what size must be issued only in dematerialised form?

ARs. 1 crore

BRs. 5 crores

✓Rs. 10 crores

DRs. 50 crores

💡 The text specifies: 'SEBI Regulations requires all public issues whose size is in excess of Rs. 10 crores to be issued only in dematerialised form.'

Q3 MCQ · 1 mark MediumDematerialisation features

What does it mean for dematerialised securities to be 'fungible'?

AThey can be easily converted back to physical form.

BThey have a distinctive identity with unique certificate numbers.

✓They do not have a distinctive identity in terms of share certificate or folio numbers.

DThey can only be traded on specific stock exchanges.

💡 The text states, "The dematerialised securities are fungible. This means that once a share is dematerialised, it does not have a distinctive identity in terms of share certificate number or distinctive numbers or folio numbers."

Q4 MCQ · 1 mark MediumRegister of Members

In the Register of Members (RoM) of a company, whose name is included in place of the investor to the extent of securities dematerialised?

AThe R&T agent's name

BThe Depository Participant's (DP) name

✓The Depository's name

DThe beneficial owner's name

💡 The text states: 'In the Register of Members (RoM) of the company, the depository’s name is included in the place of the investor to the extent of securities dematerialised.'

Q5 MCQ · 1 mark HardPower of Attorney (PoA) Limitations

As per the provided text, which of the following actions is a Power of Attorney (PoA) holder explicitly NOT allowed to perform?

AExecuting normal transactions like purchase and sale of securities.

BMaking initial investments in mutual funds or POS schemes.

✓Appointing a nominee for an investment.

DOperating the grantor's account on behalf of the grantor for transactions granted by the PoA.

💡 Section 17.4 explicitly states, 'However, the attorney cannot appoint a nominee for the investment' and 'A PoA holder cannot make or change nominations in an account or investment.' Other options describe actions that a PoA holder is generally allowed to perform.

Q6 MCQ · 1 mark EasyDematerialisation Basics

Which of the following is NOT one of the two depositories currently operational in India?

ANational Securities Depository Ltd. (NSDL)

BCentral Depository Services (I) Ltd. (CDSL)

✓Securities and Exchange Board of India (SEBI)

DBoth A and B are operational depositories.

💡 The text explicitly states, "There are currently two depositories operational in India, National Securities Depository Ltd. (NSDL) & Central Depository Services (I) Ltd. (CDSL)." SEBI is the regulatory body, not a depository.

Q7 MCQ · 1 mark EasyRepatriation norms for NRIs

If an NRI's investment in India was made from funds sourced in foreign currency, what is the repatriation status of the investment proceeds on sale or redemption of units?

AIt is non-repatriable.

✓It can be freely taken outside the country.

CIt requires special RBI permission for repatriation.

DIt can be repatriated only after a lock-in period.

💡 The text states, "If the source of funds for an NRI investment is foreign currency, it can be freely taken outside the country; that is, it is repatriable."

Q8 MCQ · 1 mark MediumDematerialisation Process

During the dematerialisation process, what action is taken by the Registrar and Share Transfer (R&T) agent regarding the physical share certificates received for dematerialisation?

AThey are returned to the investor after verification.

BThey are stored securely for a period of 5 years.

✓They are mutilated and marked with 'Surrendered for Dematerialisation'.

DThey are immediately forwarded to the depository for final processing.

💡 The text states, "The certificates received by the R&T agent will be mutilated and have the words ‘Surrendered for Dematerialisation” on it."

Q9 MCQ · 1 mark MediumPower of Attorney

Which of the following actions is an Attorney, holding a valid Power of Attorney (PoA), explicitly NOT permitted to perform on behalf of the grantor?

APurchase or sell securities.

BSettle transactions.

✓Appoint a nominee for an investment.

DMake initial investments in mutual funds.

💡 The text explicitly states: 'However, the attorney cannot appoint a nominee for the investment.' and later, 'A PoA holder cannot make or change nominations in an account or investment.' Other actions like purchase, sale, settlement, and initial investments are generally permitted based on the scope of the PoA.

Q10 MCQ · 1 mark MediumDematerialisation Process

During the dematerialisation process, what action does the R&T agent take with the physical certificates once received?

AStores them securely for future reference.

BReturns them to the investor after electronic credit.

✓Mutilates them and marks them 'Surrendered for Dematerialisation'.

DSends them to SEBI for final approval.

💡 The steps for dematerialisation state, 'The certificates received by the R&T agent will be mutilated and have the words ‘Surrendered for Dematerialisation” on it.'

Q11 MCQ · 1 mark MediumPower of Attorney Limitations

Which of the following actions is a Power of Attorney (PoA) holder explicitly NOT allowed to perform on behalf of the grantor, as per the provided text?

APurchase securities for the grantor's account.

BSettle transactions related to the grantor's investments.

✓Appoint a nominee for the grantor's investment.

DMake payments for purchases of securities.

💡 The text clearly states: 'However, the attorney cannot appoint a nominee for the investment.' And later, 'A PoA holder cannot make or change nominations in an account or investment.'

Q12 MCQ · 1 mark MediumPower of Attorney (PoA)

Which of the following actions is an Attorney (holder of PoA) explicitly NOT allowed to perform on behalf of the grantor, as per the provided text?

APurchase securities.

BSettle transactions.

✓Appoint a nominee for the investment.

DMake initial investments in mutual funds.

💡 The text states, 'However, the attorney cannot appoint a nominee for the investment.' and 'A PoA holder cannot make or change nominations in an account or investment.'

Q13 MCQ · 1 mark EasyDepositories in India

How many depositories are currently operational in India as per the provided text?

AOne

✓Two

CThree

DFour

💡 The text states: 'There are currently two depositories operational in India, National Securities Depository Ltd. (NSDL) & Central Depository Services (I) Ltd. (CDSL).'

Q14 MCQ · 1 mark MediumDematerialisation Process

In the process of dematerialisation, who is primarily responsible for verifying that the Dematerialisation Request Form (DRF) has the Depository Participant's (DP) authorization and that the physical documents match the electronic request?

AThe investor

BThe Depository

✓The Issuer/R&T agent

DThe Securities and Exchange Board of India (SEBI)

💡 The text specifies that 'The R&T agent has to verify that: The DRF has the DP’s authorization... The dematerialisation request has been received in electronic as well as physical form. The DRN in the physical documents matches with the DRN in the electronic request.'

Q15 MCQ · 1 mark MediumDematerialised Securities Characteristics

What does it mean for dematerialised securities to be 'fungible'?

AThey can be easily converted back to physical form.

✓They do not have a distinctive identity in terms of share certificate number or folio numbers.

CThey are traded exclusively on specific stock exchanges.

DThey can only be held by institutional investors.

💡 The text explains, 'The dematerialised securities are fungible. This means that once a share is dematerialised, it does not have a distinctive identity in terms of share certificate number or distinctive numbers or folio numbers.'

Q16 MCQ · 1 mark MediumDematerialisation Regulations

According to SEBI Regulations, what is the requirement for public issues whose size exceeds Rs. 10 crores?

AThey must be issued only in physical form.

✓They must be issued only in dematerialised form.

CInvestors have the option to choose between physical or dematerialised form.

DThey must be issued through a specific type of bank account.

💡 The text specifies, 'SEBI Regulations requires all public issues whose size is in excess of Rs. 10 crores to be issued only in dematerialised form.'

Q17 MCQ · 1 mark EasyDematerialisation

What is the primary function of a depository in the context of securities?

ATo provide loans against securities.

✓To hold securities of investors in electronic form.

CTo trade securities on behalf of investors.

DTo underwrite new issues of securities.

💡 As per the text, 'A depository is an institution that offers the service of holding the securities of the investors in electronic form.'

Q18 MCQ · 1 mark MediumNRI Residential Status

According to Section 6 of the Income Tax Act, an individual is deemed to be a resident in India if they are in India for a period of 60 days or more during the previous year AND what additional condition?

A182 days or more during the previous year.

✓365 days or more during 4 years immediately preceding the previous year.

C90 days or more during the previous year.

D120 days or more during 2 years immediately preceding the previous year.

💡 The text states, 'an individual is deemed to be resident in India in any previous year if he satisfies any of the following conditions: ... 2. If he is in India for a period of 60 days or more during the previous year and 365 days or more during 4 years immediately preceding the previous year.'

Q19 MCQ · 1 mark EasyDematerialised Securities

What is a key characteristic of dematerialised securities, as described in the Depositories Act, 1996?

AThey retain a distinctive identity based on share certificate number.

✓They are fungible, meaning they do not have a distinctive identity.

CStamp duty is always payable on their dematerialisation.

DThey are identified solely by the investor's folio number.

Q20 MCQ · 1 mark HardISIN

Regarding International Securities Identification Number (ISIN), which statement is correct as per the provided text?

AAn ISIN is a 10-character long identification code.

BSecurities issued by the same company but at different times are allocated the same ISIN.

CAn ISIN identifies dematerialised securities in terms of their distinctive numbers.

✓An ISIN has a pre-fix, a basic number, and a check digit.

💡 Footnote 20 states: 'The ISIN is a 12-character long identification code. It has three components--a pre-fix, a basic number and a check digit.' The same footnote also clarifies that securities issued by the same company at different times or with different rights are allotted distinct ISINs, and dematerialised securities do not have distinctive numbers.

Q21 MCQ · 1 mark MediumRematerialisation Process

During the rematerialisation process, after the Depository validates the information and forwards an electronic request, what is the next step for the R&T agent?

ATo directly dispatch the physical certificates to the shareholder.

BTo create a new folio or add to an existing folio.

CTo send the Rematerialisation Request Form (RRF) to the DP for cross-verification.

✓To cross-verify the RRF with the electronic confirmation received from the depository and forward it for processing.

💡 The text outlines the steps: 'The depository validates the information and forwards an electronic request through the depository system to R&T. This can also be viewed by the DP. The DP sends the RRF to the Issuer/R&T agent who cross verifies it with the electronic confirmation received from the depository and forwards it for processing.'

Q22 MCQ · 1 mark HardNRI Investment Repatriation

An NRI investor made an investment in India using funds sourced from their earnings in Indian Rupees. Which of the following statements regarding the repatriation of proceeds from this investment is correct?

AThe proceeds can be freely repatriated to a foreign country, as all NRI investments are repatriable.

✓The proceeds are non-repatriable because the rupee is not fully convertible on capital account.

CThe proceeds can be repatriated only if the NRI obtains special permission from the Reserve Bank of India.

DThe proceeds can be clubbed with investments made from foreign currency for full repatriation.

💡 The text states: 'If the source of funds is Indian Rupees, it is non-repatriable.' It further clarifies, 'The reason for the rupee investment proceeds being non-repatriable is that since the rupee is not fully convertible on capital account, RBI norms do not permit investment in Indian rupees to be freely converted to other world currencies and to be taken out in foreign currency.' Also, 'Investment made from these two sources of income cannot be clubbed together.'

Q23 MCQ · 1 mark MediumDematerialisation Rejection

Which of the following is a valid reason for a dematerialisation request to be fully or partially rejected by the R&T agent?

AThe investor has too many existing demat accounts.

BThe physical certificates have distinguishing marks like a hologram/watermark.

✓Mismatch in information between the Dematerialisation Request Form (DRF) and physical certificates.

DThe request was submitted electronically before the physical documents were received.

💡 The text lists 'Mismatch in the information between the DRF and physical certificates' as a reason for rejection.

Q24 MCQ · 1 mark EasyDematerialisation Process

What is the first step an investor takes when initiating the dematerialisation process for their physical securities?

AThe investor sends the securities directly to the Depository.

✓The investor hands over the securities along with the Dematerialisation Request Form (DRF) to the DP.

CThe investor directly contacts the R&T agent to verify certificate details.

DThe investor submits the DRF electronically to the Depository.

💡 The first step listed under Dematerialisation is: 'Investor hands over the securities to be dematerialised along with the Dematerialisation Request Form (DRF) to the DP.'

Q25 MCQ · 1 mark EasyDematerialisation Basics

Which of the following institutions provides the service of holding investors' securities in electronic form?

ACommercial Bank

BReserve Bank of India

✓Depository

DStock Exchange

💡 A depository is an institution that offers the service of holding the securities of the investors in electronic form, similar to how a bank holds funds.

Q26 MCQ · 1 mark MediumNRI Investment Repatriation

An NRI makes an investment in India using funds sourced from Indian Rupees earned in India. According to the text, what is the repatriation status of the proceeds from this investment upon sale or redemption?

AFreely repatriable, as long as the amount is below a specified limit.

BFreely repatriable, regardless of the amount.

✓Non-repatriable, because the Rupee is not fully convertible on capital account.

DRepatriable, but only after obtaining special permission from RBI.

💡 The text states, "If the source of funds is Indian Rupees, it is non-repatriable." It further clarifies that this is "because the rupee is not fully convertible on capital account, RBI norms do not permit investment in Indian rupees to be freely converted to other world currencies and to be taken out in foreign currency."

Q27 MCQ · 1 mark EasyDepositories in India

How many depositories are currently operational in India as per the provided text?

AOne

✓Two

CThree

DFour

💡 The text states, 'There are currently two depositories operational in India, National Securities Depository Ltd. (NSDL) & Central Depository Services (I) Ltd. (CDSL).'

Q28 MCQ · 1 mark MediumPower of Attorney (PoA)

Which of the following actions is a Power of Attorney (PoA) holder explicitly NOT allowed to perform on behalf of the grantor, as per the text?

APurchase securities.

BSettle transactions.

✓Appoint a nominee for the investment.

DMake payments for purchases.

💡 The text states, 'However, the attorney cannot appoint a nominee for the investment.' And later, 'A PoA holder cannot make or change nominations in an account or investment.' Other options are listed as normal transactions a PoA holder can do.

Q29 MCQ · 1 mark MediumPower of Attorney

Which of the following actions is a Power of Attorney (PoA) holder explicitly NOT allowed to perform according to the text?

APurchase securities on behalf of the grantor.

BSettle transactions for the grantor.

✓Appoint a nominee for the investment.

DMake payments for purchases.

💡 The text states, 'However, the attorney cannot appoint a nominee for the investment.' and 'A PoA holder cannot make or change nominations in an account or investment.'

Q30 MCQ · 1 mark HardNon-Resident Indian (NRI) Investment Repatriation

An NRI invests in India. If the source of funds for this investment was Indian Rupees earned in India, what is the repatriation status of the proceeds from the sale or redemption of these units?

AFreely repatriable, as long as the total amount is below a specified limit.

✓Non-repatriable, due to the Rupee not being fully convertible on capital account.

CRepatriable, but only after obtaining special permission from the Reserve Bank of India.

DPartially repatriable, with a certain percentage allowed to be converted to foreign currency.

💡 The text explicitly states, "If the source of funds is Indian Rupees, it is non-repatriable." and further explains, "The reason for the rupee investment proceeds being non-repatriable is that since the rupee is not fully convertible on capital account, RBI norms do not permit investment in Indian rupees to be freely converted to other world currencies and to be taken out in foreign currency."

Q31 MCQ · 1 mark MediumRematerialisation Process

During the rematerialisation process, what action does the R&T agent take regarding the Register of Members (RoM) of the company?

AThe R&T agent adds the depository's name to the RoM.

BThe R&T agent removes the names of beneficial owners from the RoM.

✓The names of the beneficial owners will be included in the RoM, and the name of the depository removed to that extent.

DThe RoM is not affected by the rematerialisation process.

💡 The text states, 'The names of the beneficial owners will be included in the Register of members of the company and the name of the depository removed to that extent.'

Q32 MCQ · 1 mark MediumDematerialisation Process

Which of the following is NOT a valid reason for a dematerialisation request to be rejected by the R&T agent, according to the text?

AMismatch in information between the Dematerialisation Request Form (DRF) and physical certificates.

BThe securities stand in a different name(s) from that mentioned in the DRF.

✓The investor's account with the Depository Participant (DP) has insufficient balance.

DThe physical certificates are fake or stolen.

💡 The text lists several reasons for rejection, including 'Mismatch in the information between the DRF and physical certificates,' 'Certificates are fake, stolen or for which duplicates have been issued,' and 'Securities stand in a different name(s) from that mentioned in the DRF.' Insufficient balance in the DP account is not mentioned as a reason for dematerialisation rejection.

Q33 MCQ · 1 mark MediumRematerialisation Process

During the rematerialisation process, what action does the R&T agent take regarding the Register of Members (RoM) of the company?

AThe depository's name is added to the RoM.

BThe names of the beneficial owners are removed from the RoM.

✓The names of the beneficial owners are included in the RoM, and the depository's name is removed to that extent.

DThe RoM is not affected by rematerialisation.

💡 The text states, 'The names of the beneficial owners will be included in the Register of members of the company and the name of the depository removed to that extent.'

Q34 MCQ · 1 mark HardNRI Definition (Income Tax Act)

An individual, who is a citizen of India, comes on a visit to India during the previous year. Under Section 6 of the Income-tax Act, to determine if this individual is a non-resident, which of the following conditions for residency is NOT applicable to them?

ABeing in India for a period of 182 days or more during the previous year.

✓Being in India for a period of 60 days or more during the previous year AND 365 days or more during 4 years immediately preceding the previous year.

CBeing in India for a period of 120 days or more during the previous year.

DBeing in India for a period of 90 days or more during the previous year.

💡 The text states, 'However, condition No. 2 (mentioned above) does not apply where an individual being citizen of India or a person of Indian origin, who being outside India, comes on a visit to India during the previous year.' Condition No. 2 is 'If he is in India for a period of 60 days or more during the previous year and 365 days or more during 4 years immediately preceding the previous year.' Options C and D are not mentioned as conditions in the text.

Q35 MCQ · 1 mark HardNRI Residential Status

According to Section 6 of the Income Tax Act, for an individual who is a citizen of India or a person of Indian origin visiting India, which of the following conditions, if met *alone*, would NOT deem them a resident in India for a previous year?

AIf they are in India for a period of 182 days or more during the previous year.

✓If they are in India for a period of 60 days or more during the previous year AND 365 days or more during 4 years immediately preceding the previous year.

CIf they are in India for a period of 120 days or more during the previous year and 365 days or more during 4 years immediately preceding the previous year.

DBoth A and B.

💡 The text outlines two conditions for residency: 1) 182 days or more in the previous year, or 2) 60 days or more in the previous year AND 365 days or more in 4 preceding years. It then states: 'However, condition No. 2 (mentioned above) does not apply where an individual being citizen of India or a person of Indian origin, who being outside India, comes on a visit to India during the previous year.' Therefore, if a visiting citizen/PIO meets only condition 2, they would not be deemed a resident based on that condition.

Q36 MCQ · 1 mark HardNRI Investment Repatriation

Regarding Non-Resident Indian (NRI) investments in India, which of the following statements about repatriation of investment proceeds is FALSE?

AIf the source of funds for an NRI investment is foreign currency, the proceeds can be freely repatriated.

BIf the source of funds for an NRI investment is Indian Rupees, the proceeds are non-repatriable.

✓Investment made from foreign currency and Indian Rupee sources can be clubbed together for repatriation purposes.

DThe non-repatriable nature of Rupee investment proceeds is due to the Rupee not being fully convertible on capital account.

💡 The text explicitly states, 'Investment made from these two sources of income cannot be clubbed together.' Therefore, option C is false. Options A, B, and D are true statements based on the provided text.

Q37 MCQ · 1 mark MediumPower of Attorney Validity

Which of the following is a mandatory requirement for a Power of Attorney (PoA) to be considered valid, according to the text?

AIt must be handwritten by the grantor.

✓It must be stamped according to the rules applicable in the state of execution.

CIt must be signed only by the attorney/holder on the last page.

DIt must be executed only by non-resident investors.

💡 The text lists the validity requirements: 'To be valid the PoA must be: ... Stamped according to the rules applicable in the state in which it is executed.' It also states it must be typed, signed by grantor on all pages and by grantor and holder on last page, and notarised (though this varies).

Q38 MCQ · 1 mark HardPower of Attorney

Which of the following actions is a Power of Attorney (PoA) holder explicitly NOT permitted to perform on behalf of the grantor, according to the provided text?

APurchase and make payments for new investments.

BSettle transactions and redeem existing investments.

✓Appoint a nominee for an investment.

DOperate the grantor's account for transactions.

💡 The text clearly states, 'However, the attorney cannot appoint a nominee for the investment.' and 'A PoA holder cannot make or change nominations in an account or investment.'

Q39 MCQ · 1 mark MediumPower of Attorney limitations

Which of the following actions can a Power of Attorney (PoA) holder NOT perform on behalf of the grantor, according to the provided text?

APurchase securities

BMake payment for purchases

✓Appoint a nominee for an investment

DSettle transactions

💡 The text clearly states, "However, the attorney cannot appoint a nominee for the investment." and "A PoA holder cannot make or change nominations in an account or investment."

Q40 MCQ · 1 mark HardPower of Attorney Validity

To be valid, a Power of Attorney (PoA) executed within India must meet several criteria. Which of the following is NOT universally required for a PoA to be valid, as per the text?

ATyped on a non-judicial stamp paper.

BSigned by the grantor on all pages.

✓Notarised by a notary public.

DStamped according to the rules applicable in the state of execution.

💡 The text states regarding notarization: 'This requirement varies among different entities and intermediaries.' It is not a universal requirement.

Q41 MCQ · 1 mark HardRepatriation Norms for NRIs

An NRI makes an investment in India. Which of the following scenarios correctly describes the repatriation status of the investment proceeds?

AInvestment made from foreign currency is non-repatriable, while investment from Indian Rupees is freely repatriable.

BAll investment proceeds for NRIs are freely repatriable, regardless of the source of funds.

✓Investment made from foreign currency is freely repatriable, but investment made from Indian Rupees is non-repatriable.

DNRIs can freely club investments from both foreign currency and Indian Rupee sources for repatriation purposes.

💡 The text clearly states, 'If the source of funds for an NRI investment is foreign currency, it can be freely taken outside the country; that is, it is repatriable. If the source of funds is Indian Rupees, it is non-repatriable. Investment made from these two sources of income cannot be clubbed together.'

Q42 MCQ · 1 mark EasyDepositories in India

How many depositories are currently operational in India as per the provided text?

AOne

✓Two

CThree

DFour

💡 The text explicitly states: 'There are currently two depositories operational in India, National Securities Depository Ltd. (NSDL) & Central Depository Services (I) Ltd. (CDSL).'

Q43 MCQ · 1 mark MediumDematerialised Securities

Which of the following statements accurately describes the concept of 'fungible' in relation to dematerialised securities?

ADematerialised securities can be easily converted back to physical form.

✓Once dematerialised, a security loses its unique identity like share certificate or distinctive numbers.

CDematerialised securities can only be traded on specific exchanges.

DThe ownership of dematerialised securities is always held jointly.

Q44 MCQ · 1 mark EasyDepositories in India

How many depositories are currently operational in India as per the provided text?

AOne

✓Two

CThree

DFour

💡 The text states: 'There are currently two depositories operational in India, National Securities Depository Ltd. (NSDL) & Central Depository Services (I) Ltd. (CDSL).'

Q45 MCQ · 1 mark EasyDepositories in India

How many depositories are currently operational in India according to the provided text?

AOne

✓Two

CThree

DFour

💡 The text states, 'There are currently two depositories operational in India, National Securities Depository Ltd. (NSDL) & Central Depository Services (I) Ltd. (CDSL).'

Q46 MCQ · 1 mark MediumNRI Investments and Repatriation

According to the chapter, regarding Non-Resident Indian (NRI) investments, under what condition are investment proceeds considered non-repatriable?

AIf the investment was made from funds earned in foreign currency.

✓If the investment was made from funds earned in Indian Rupees.

CIf the investment was made by a Person of Indian Origin (PIO).

DIf the investment was made in a dematerialised form.

💡 The text states, 'If the source of funds is Indian Rupees, it is non-repatriable.' It also clarifies that if the source is foreign currency, it is freely repatriable.

Q47 MCQ · 1 mark MediumPower of Attorney Limitations

Which of the following actions is a Power of Attorney (PoA) holder explicitly NOT authorized to perform on behalf of the grantor, according to the provided text?

ASettling transactions.

BMaking initial investments.

✓Appointing a nominee for the investment.

DMaking payments for purchases.

💡 The text states, 'However, the attorney cannot appoint a nominee for the investment' and later reinforces, 'A PoA holder cannot make or change nominations in an account or investment.'

Q48 MCQ · 1 mark MediumPower of Attorney (PoA) Limitations

Which of the following actions is an Attorney, or holder of a Power of Attorney (PoA), explicitly *not* allowed to perform on behalf of the grantor, as per the text?

APurchase securities

BSettle transactions

✓Appoint a nominee for the investment

DMake payments for purchases

💡 The text states, 'However, the attorney cannot appoint a nominee for the investment.' and 'A PoA holder cannot make or change nominations in an account or investment.'

Q49 MCQ · 1 mark HardNRI Definition

As per Section 6 of the Income Tax Act, which of the following conditions, if satisfied, would deem an individual to be a resident in India in any previous year, with a specific exception for Indian citizens/PIOs visiting India?

✓If in India for a period of 182 days or more during the previous year.

BIf in India for a period of 90 days or more during the previous year and 180 days or more during 4 years immediately preceding the previous year.

CIf in India for a period of 60 days or more during the previous year and 365 days or more during 4 years immediately preceding the previous year, without any exception.

DIf in India for a period of 30 days or more during the previous year.

💡 The text states: 'an individual is deemed to be resident in India in any previous year if he satisfies any of the following conditions: 1. If he is in India for a period of 182 days or more during the previous year; or 2. If he is in India for a period of 60 days or more during the previous year and 365 days or more during 4 years immediately preceding the previous year. However, condition No. 2 (mentioned above) does not apply where an individual being citizen of India or a person of Indian origin, who being outside India, comes on a visit to India during the previous year.' Option A is a direct fulfillment of condition 1.

Q50 MCQ · 1 mark EasyDematerialisation Regulations

According to SEBI Regulations mentioned in the text, what is the requirement for public issues exceeding a certain size?

AThey must be issued only in physical form.

✓They must be issued only in dematerialised form if their size is in excess of Rs. 10 crores.

CThey must be issued in both physical and dematerialised forms simultaneously.

DThey must be issued only by NSDL, not CDSL.

💡 Section 17.3 states, 'SEBI Regulations requires all public issues whose size is in excess of Rs. 10 crores to be issued only in dematerialised form.'

Q51 MCQ · 1 mark MediumNRI Investments

An NRI investor made an investment in India using funds sourced from foreign currency. When these investments are sold or redeemed, what is the repatriation status of the proceeds?

AThe proceeds are non-repatriable, as the rupee is not fully convertible on capital account.

BThe proceeds are freely repatriable, regardless of the source of funds.

✓The proceeds are freely repatriable, as the source of funds was foreign currency.

DThe repatriation status depends on the specific investment scheme and not the source of funds.

💡 The text states: 'If the source of funds for an NRI investment is foreign currency, it can be freely taken outside the country; that is, it is repatriable.'

Q52 MCQ · 1 mark EasyDepositories in India

How many depositories are currently operational in India, as per the Depositories Act 1996?

AOne

✓Two

CThree

DFour

💡 The text states, 'There are currently two depositories operational in India, National Securities Depository Ltd. (NSDL) & Central Depository Services (I) Ltd. (CDSL).'

Q53 MCQ · 1 mark EasyDepositories and Regulations

What is the primary function of a depository as described in the provided text?

ATo provide loans and advances against securities held in physical form.

BTo manage the investment portfolio of clients by buying and selling securities on their behalf.

✓To hold the securities of investors in electronic form and facilitate transactions.

DTo regulate the stock exchanges and ensure fair trading practices.

💡 The text defines a depository as 'an institution that offers the service of holding the securities of the investors in electronic form' and states it 'provides services related to transaction in securities.' Options A, B, and D describe functions of banks, investment advisors/brokers, and regulatory bodies (like SEBI), respectively, not a depository.

Q54 MCQ · 1 mark EasyDematerialisation

What is the primary function of a depository in the context of securities?

ATo facilitate physical transfer of securities between investors.

✓To hold investors' securities in electronic form and facilitate transactions.

CTo provide loans against physical share certificates.

DTo issue new securities to investors directly.

💡 As per the text, 'A depository is an institution that offers the service of holding the securities of the investors in electronic form... Similarly, a depository allows the investors to hold their securities in electronic rather than physical form and provides services related to transaction in securities.'

Q55 MCQ · 1 mark MediumDematerialisation Process

Which of the following is NOT a valid reason for the rejection of a dematerialisation request by the R&T agent?

AMismatch in information between the Dematerialisation Request Form (DRF) and physical certificates.

BThe securities stand in a different name(s) from that mentioned in the DRF.

CThe Dematerialisation Request Number (DRN) in the physical documents does not match the electronic request.

✓The investor's account with the DP is already credited with the number of dematerialised shares.

💡 The text lists reasons for rejection including 'Mismatch in the information between the DRF and physical certificates,' 'Securities stand in a different name(s) from that mentioned in the DRF,' and a mismatch in DRN is implied by the verification step 'The DRN in the physical documents matches with the DRN in the electronic request.' Option D describes a state after successful dematerialisation, not a reason for rejection.

Q56 MCQ · 1 mark MediumDematerialised Securities

Once a security is dematerialised, how is it primarily identified in the depository, according to the text?

ABy its original physical share certificate number and distinctive numbers.

BBy the investor's unique folio number and the date of dematerialisation.

✓By the International Securities Identification Number (ISIN) and the number of shares.

DBy the name of the issuing company and the market capitalization.

💡 The text states, 'The dematerialised securities are fungible. This means that once a share is dematerialised, it does not have a distinctive identity in terms of share certificate number or distinctive numbers or folio numbers... In the depository, the dematerialised securities are identified in terms of the ISIN (International Securities Identification Number) and the number of shares.'

Q57 MCQ · 1 mark EasyDepositories in India

How many depositories are currently operational in India, as per the Depositories Act passed in 1996?

AOne

✓Two

CThree

DFour

💡 The text states, 'There are currently two depositories operational in India, National Securities Depository Ltd. (NSDL) & Central Depository Services (I) Ltd. (CDSL).'

Q58 MCQ · 1 mark EasyNRI Investment Repatriation

As per the text, if an NRI's investment in India originated from funds earned in foreign currency, what is its repatriation status?

AIt is non-repatriable.

✓It can be freely taken outside the country.

CIt requires special RBI approval for repatriation.

DIt can only be repatriated after a lock-in period.

💡 The text states: 'If the source of funds for an NRI investment is foreign currency, it can be freely taken outside the country; that is, it is repatriable.'

Q59 MCQ · 1 mark HardNRI Residential Status

According to Section 6 of the Income Tax Act, an individual who is a citizen of India and was outside India, comes on a visit to India during the previous year for 70 days. In the four immediately preceding years, they were in India for a total of 370 days. What is their residential status for the previous year?

AResident in India

✓Non-resident in India

CResident but Not Ordinarily Resident

DThe information is insufficient to determine.

💡 An individual is deemed resident if they are in India for 182 days or more during the previous year (70 days < 182, so Condition 1 is not met). Or, if they are in India for 60 days or more during the previous year (70 days > 60, met) AND 365 days or more during 4 years immediately preceding the previous year (370 days > 365, met). However, the text explicitly states that "condition No. 2 (mentioned above) does not apply where an individual being citizen of India or a person of Indian origin, who being outside India, comes on a visit to India during the previous year." Since Condition 1 is not met and Condition 2 does not apply, the individual is a Non-resident in India.

Q60 MCQ · 1 mark HardRepatriation of NRI Investments

An NRI invests in India. If the source of funds for this investment was Indian Rupees, what is the repatriation status of the investment proceeds on sale or redemption of units, and why?

AFreely repatriable, because the rupee is fully convertible on capital account.

✓Non-repatriable, because the rupee is not fully convertible on capital account.

CFreely repatriable, as all NRI investments are allowed free repatriation.

DNon-repatriable, but only if the investment amount exceeds a certain limit set by SEBI.

💡 The text states: 'If the source of funds is Indian Rupees, it is non-repatriable. ... The reason for the rupee investment proceeds being non-repatriable is that since the rupee is not fully convertible on capital account, RBI norms do not permit investment in Indian rupees to be freely converted to other world currencies and to be taken out in foreign currency.'

Q61 MCQ · 1 mark EasyDematerialisation Basics

Which of the following institutions offers the service of holding the securities of investors in electronic form?

ACommercial Bank

BReserve Bank of India (RBI)

✓Depository

DStock Exchange

💡 As per the text, 'A depository is an institution that offers the service of holding the securities of the investors in electronic form.'

Q62 MCQ · 1 mark EasyDematerialisation

What is the primary function of a depository as described in the chapter?

ATo provide banking services for investors' funds.

BTo hold investors' securities in physical form.

✓To hold investors' securities in electronic form.

DTo facilitate physical transfer of shares between investors.

💡 The text states, 'A depository is an institution that offers the service of holding the securities of the investors in electronic form.'

Q63 MCQ · 1 mark EasyDematerialisation and Depositories

Which of the following statements accurately describes the primary function of a depository in the context of securities?

AIt facilitates physical transfer of share certificates between investors.

BIt provides a platform for trading derivatives and commodities.

✓It holds investors' securities in electronic form and facilitates transactions.

DIt acts as a regulator for the stock market in India.

Q64 MCQ · 1 mark MediumPower of Attorney Validity

If a Power of Attorney (PoA) is executed abroad, which of the following is a valid requirement for its initial attestation?

AIt must be typed on a non-judicial stamp paper from India.

✓It must be attested by a designated official of the Indian embassy abroad or by a notary abroad.

CIt must be signed only by the holder of the power of attorney.

DIt is not valid in India if executed abroad.

💡 The text states: 'If the Power of Attorney is executed abroad, it can be typed on a plain paper, attested by a designated official of the Indian embassy abroad or by a notary abroad, signed on all pages by the grantor and sent to India for the holder of the power of attorney to sign on the last page.'

Q65 MCQ · 1 mark EasyDematerialisation process

Which of the following entities is NOT directly involved in the dematerialisation process as described in the chapter?

AInvestor

BDepository Participant (DP)

CIssuer/R&T agent

✓Stock Exchange

💡 The text states, "Dematerialisation is the process of converting physical securities into electronic form. It involves the investor, the DP, the issuer/R&T agent and the depository." Stock Exchange is not listed as a direct participant in this process.

Q66 MCQ · 1 mark MediumDematerialisation Process

In the process of dematerialisation, what is the role of the Registrar and Transfer (R&T) agent after receiving the physical documents and electronic request from the Depository Participant (DP)?

ATo directly credit the investor's demat account.

✓To verify the documents, mutilate physical certificates, and update the Register of Members.

CTo issue new physical share certificates to the investor.

DTo determine the market value of the securities to be dematerialised.

💡 The text states: 'The R&T agent has to verify that: ... The certificates received by the R&T agent will be mutilated and have the words ‘Surrendered for Dematerialisation” on it... In the Register of Members (RoM) of the company, the depository’s name is included in the place of the investor to the extent of securities dematerialised.'

Q67 MCQ · 1 mark MediumDematerialisation Regulations

According to SEBI Regulations, what is the requirement for public issues exceeding Rs. 10 crores?

AThey must be issued only in physical form.

✓They must be issued only in dematerialised form.

CInvestors have the option to choose between physical and dematerialised form.

DThey are exempt from dematerialisation requirements.

💡 The text mentions, 'SEBI Regulations requires all public issues whose size is in excess of Rs. 10 crores to be issued only in dematerialised form.'

Q68 MCQ · 1 mark MediumPower of Attorney Limitations

Which of the following actions is a Power of Attorney (PoA) holder explicitly NOT permitted to do on behalf of the grantor, according to the text?

APurchase securities.

BSettle transactions.

✓Appoint a nominee for the investment.

DMake payments for purchases.

💡 The text explicitly states, 'However, the attorney cannot appoint a nominee for the investment.' and 'A PoA holder cannot make or change nominations in an account or investment.'

Q69 MCQ · 1 mark MediumDematerialisation Process

In the process of dematerialisation, what action does the R&T agent take with the physical certificates once the dematerialisation request is received and verified?

AReturns them to the investor as proof of dematerialisation.

✓Mutilates them and marks them 'Surrendered for Dematerialisation'.

CStores them securely for a period of 10 years.

DForwards them to SEBI for final approval.

💡 The text states: 'The certificates received by the R&T agent will be mutilated and have the words ‘Surrendered for Dematerialisation” on it.'

Q70 MCQ · 1 mark MediumDematerialisation regulations

As per SEBI Regulations, what is the requirement for public issues whose size exceeds Rs. 10 crores?

AThey must be issued only in physical form.

✓They must be issued only in dematerialised form.

CInvestors have the option to choose between physical and dematerialised form.

DThey are exempt from dematerialisation requirements.

💡 The text states, "SEBI Regulations requires all public issues whose size is in excess of Rs. 10 crores to be issued only in dematerialised form."

Q71 MCQ · 1 mark HardRematerialisation process details

During the rematerialisation process, what specific action does the R&T agent perform regarding the certificate numbers?

✓Assigns new certificate numbers and distinctive numbers from the set of shares already dematerialised.

BReuses the original certificate numbers that were associated with the physical shares before dematerialisation.

CRequests the depository to assign new certificate numbers.

DPrints certificates without distinctive numbers, as they are no longer relevant.

💡 The text states, "The R&T agent will assign a new certificate number and distinctive numbers from the set of shares already dematerialised."

Q72 MCQ · 1 mark EasyDematerialisation Basics

Which of the following statements accurately describes the primary function of a depository in India?

AIt provides loans against securities held in physical form.

BIt acts as a regulator for the securities market.

✓It offers the service of holding investor securities in electronic form.

DIt directly facilitates the trading of physical securities on stock exchanges.

💡 The text states, 'A depository is an institution that offers the service of holding the securities of the investors in electronic form.'

Q73 MCQ · 1 mark MediumPower of Attorney

Which of the following actions is explicitly stated as *not* allowed for a Power of Attorney (PoA) holder?

ASelling securities on behalf of the grantor.

BMaking payment for securities purchased by the grantor.

✓Appointing a nominee for the grantor's investment.

DSettling transactions related to the grantor's investments.

💡 The text explicitly states, 'However, the attorney cannot appoint a nominee for the investment' and 'A PoA holder cannot make or change nominations in an account or investment.'

Q74 MCQ · 1 mark HardPower of Attorney Limitations

Which of the following actions can a Power of Attorney (PoA) holder NOT perform on behalf of the grantor, according to the provided text?

APurchase investments

BSettle transactions

✓Appoint a nominee for an investment

DManage real estate (if granted by General PoA)

💡 The text explicitly states, "However, the attorney cannot appoint a nominee for the investment." and later, "A PoA holder cannot make or change nominations in an account or investment." The other options are either explicitly allowed (purchase, settlement) or covered under General PoA (managing real estate).

Q75 MCQ · 1 mark EasyDematerialisation basics

Which of the following acts allows companies and investors to issue, hold, and transact in securities through a depository?

AThe SEBI Act, 1992

BThe Companies Act, 2013

✓The Depositories Act, 1996

DThe Securities Contracts (Regulation) Act, 1956

💡 The text explicitly states, "The Depositories Act was passed in 1996 which allow companies and investors to issue, hold and transact in securities through a depository."

Q76 MCQ · 1 mark MediumPower of Attorney

Which of the following actions is a Power of Attorney (PoA) holder explicitly NOT authorised to perform on behalf of the grantor?

APurchase or sell securities.

BSettle transactions.

✓Appoint a nominee for the investment.

DMake initial investments and subsequent purchases in mutual funds.

💡 The text clearly states, 'However, the attorney cannot appoint a nominee for the investment.' It also mentions, 'A PoA holder cannot make or change nominations in an account or investment.' The other options are generally allowed or explicitly mentioned as possible actions for a PoA holder.

Q77 MCQ · 1 mark EasyDematerialisation Basics

What is the primary function of a depository as described in the chapter text?

ATo facilitate physical transfer of securities between investors.

✓To hold the securities of investors in electronic form and provide transaction services.

CTo issue new securities for companies and manage their public offerings.

DTo provide advisory services for investment management to clients.

💡 The text states, 'A depository is an institution that offers the service of holding the securities of the investors in electronic form... Similarly, a depository allows the investors to hold their securities in electronic rather than physical form and provides services related to transaction in securities.'

Q78 MCQ · 1 mark EasyDematerialisation Basics

Which of the following institutions offers the service of holding securities of investors in electronic form in India?

AReserve Bank of India (RBI)

BSecurities and Exchange Board of India (SEBI)

✓Depositories

DCommercial Banks

💡 As per the text, 'A depository is an institution that offers the service of holding the securities of the investors in electronic form.'

Q79 MCQ · 1 mark EasyDematerialisation

What is the primary function of a depository in the context of securities?

ATo provide loans against securities.

✓To hold the securities of investors in electronic form.

CTo facilitate physical transfer of securities between investors.

DTo issue new securities for companies.

💡 As per the text, 'A depository is an institution that offers the service of holding the securities of the investors in electronic form.'

Q80 MCQ · 1 mark HardNRI Investment Repatriation

An NRI invests in India using funds earned in Indian Rupees from an income source in India. Later, they also invest using foreign currency transferred from their overseas account. If they decide to redeem their investments, which of the following statements regarding repatriation of proceeds is correct?

ABoth investments' proceeds can be freely repatriated as the investor is an NRI.

✓Only the proceeds from the investment made with foreign currency can be freely repatriated.

COnly the proceeds from the investment made with Indian Rupees can be freely repatriated.

DNeither investment's proceeds can be freely repatriated because the rupee is not fully convertible on capital account.

💡 The text states: 'If the source of funds for an NRI investment is foreign currency, it can be freely taken outside the country; that is, it is repatriable. If the source of funds is Indian Rupees, it is non-repatriable. Investment made from these two sources of income cannot be clubbed together.' Therefore, only the foreign currency-sourced investment proceeds are repatriable.

Q81 MCQ · 1 mark MediumDematerialisation Rejection Reasons

Which of the following is a valid reason for the rejection of a dematerialisation request by the R&T agent?

AThe investor has too many existing demat accounts.

BThe Dematerialisation Request Form (DRF) has the DP's authorization.

✓The certificates are fake or duplicates have been issued.

DThe investor's account with the DP is already credited with dematerialised shares.

💡 The text lists 'Certificates are fake, stolen or for which duplicates have been issued' as a reason for rejection. Option B is a verification point for approval, not a rejection reason.

Q82 MCQ · 1 mark MediumDematerialisation Process

Which of the following is NOT a valid reason for the rejection of a dematerialisation request by the R&T agent?

AMismatch in information between the Dematerialisation Request Form (DRF) and physical certificates.

BCertificates are found to be fake or stolen.

✓The investor's account with the DP is already credited with the dematerialised shares.

DSignature of the holders does not tally with the records of the R&T agent.

💡 The text lists reasons for rejection including 'Mismatch in the information between the DRF and physical certificates,' 'Certificates are fake, stolen or for which duplicates have been issued,' and 'Signature of the holders does not tally with the records of the R&T agent.' If the investor's account with the DP is already credited, it means the dematerialisation process was successfully completed, not rejected. Therefore, C is not a reason for rejection.

Q83 MCQ · 1 mark EasyDematerialisation of Securities

Which of the following is NOT an eligible security for dematerialisation as per SEBI (Depository and Participants) Regulations of 1996?

AUnits of a mutual fund

BGovernment securities

CCollective investment scheme rights

✓Physical share certificates of a proprietary firm

💡 The text states eligible securities include "Shares, scrips, stocks, bonds, debentures, debenture stock or other marketable security of any incorporated company or other body corporate" and "Units of a mutual fund, rights under a collective investment scheme, venture capital funds, certificates of deposit, commercial paper, money market instruments, government securities and unlisted securities." Physical share certificates of a proprietary firm are not listed as eligible.

Q84 MCQ · 1 mark EasyDematerialisation Basics

Which of the following best describes the primary service offered by a depository?

AProviding physical certificates for securities.

✓Holding investors' securities in electronic form.

CManaging mutual fund portfolios directly.

DFacilitating foreign currency exchange for investors.

💡 A depository is an institution that offers the service of holding the securities of the investors in electronic form, similar to a bank holding funds.

Q85 MCQ · 1 mark EasyDematerialisation Basics

Which of the following statements is TRUE regarding the dematerialisation of securities in India?

AAll public issues, regardless of size, are required to be issued only in dematerialised form.

BInvestors in mutual funds are mandated to hold their units only in dematerialised form.

COnce a share is dematerialised, it retains its distinctive identity in terms of share certificate number or folio numbers.

✓There are currently two depositories operational in India: National Securities Depository Ltd. (NSDL) and Central Depository Services (I) Ltd. (CDSL).

💡 The text states: 'There are currently two depositories operational in India, National Securities Depository Ltd. (NSDL) & Central Depository Services (I) Ltd. (CDSL).' Option A is incorrect because only public issues in excess of Rs. 10 crores are required to be in dematerialised form. Option B is incorrect as mutual fund investors are free to hold units in physical form. Option C is incorrect because dematerialised shares do not have a distinctive identity in terms of certificate or folio numbers.

Q86 MCQ · 1 mark MediumDematerialisation Process

Which of the following is NOT a valid reason for the rejection of a dematerialisation request by the R&T agent?

AMismatch in information between the Dematerialisation Request Form (DRF) and physical certificates.

BThe securities stand in a different name(s) from that mentioned in the DRF.

✓The investor's account with the Depository Participant (DP) already has sufficient shares.

DThe physical certificates are fake or stolen.

💡 The text lists reasons for rejection as: 'Mismatch in the information between the DRF and physical certificates,' 'Certificates are fake, stolen or for which duplicates have been issued,' and 'Securities stand in a different name(s) from that mentioned in the DRF.' The investor's existing account balance is not cited as a reason for rejection of a dematerialisation request.

Q87 MCQ · 1 mark MediumPower of Attorney Limitations

Which of the following actions is an Attorney, or holder of a Power of Attorney (PoA), explicitly *not* allowed to perform on behalf of the grantor, as per the text?

APurchase of securities

BSale of securities

CSettlement of transactions

✓Appointing a nominee for the investment

💡 The text clearly states: 'However, the attorney cannot appoint a nominee for the investment.' and later, 'A PoA holder cannot make or change nominations in an account or investment.'

Q88 MCQ · 1 mark MediumPower of Attorney Validity

Which of the following is NOT always a mandatory requirement for a Power of Attorney (PoA) to be valid in India, as per the provided text?

ASigned by the grantor on all pages.

BTyped on a non-judicial stamp paper.

✓Notarised by a notary public.

DStamped according to the rules applicable in the state.

💡 The text clarifies: 'Notarised by a notary public. This requirement varies among different entities and intermediaries. For example, some mutual funds may require the PoA to be notarized, while a PoA to operate a demat account needs to notarized only if the depository participant so requires.' This indicates it's not universally mandatory.

Q89 MCQ · 1 mark MediumNRI Investments

An NRI makes an investment in India using funds sourced from foreign currency. When these investment proceeds are realized (e.g., through sale or redemption), what is their repatriation status?

AThey are always non-repatriable due to RBI norms.

✓They can be freely taken outside the country, i.e., they are repatriable.

CRepatriation depends on the specific investment scheme.

DOnly a portion of the proceeds is repatriable, as per SEBI guidelines.

💡 The text states, 'If the source of funds for an NRI investment is foreign currency, it can be freely taken outside the country; that is, it is repatriable.'

Q90 MCQ · 1 mark MediumPower of Attorney Validity

Which of the following is NOT a mandatory requirement for a Power of Attorney (PoA) to be valid, as per the text?

ASigned by the grantor on all pages.

BTyped on a non-judicial stamp paper.

✓Must be notarised by a notary public in all cases.

DStamped according to the rules applicable in the state of execution.

💡 The text states, 'Notarised by a notary public. This requirement varies among different entities and intermediaries.' This indicates it is not universally mandatory for all cases.

Q91 MCQ · 1 mark MediumPower of Attorney (PoA) Validity

Which of the following is NOT a mandatory requirement for a Power of Attorney (PoA) to be valid, as per the provided text?

AIt must be typed on a non-judicial stamp paper.

BIt must be signed by the grantor on all pages.

✓It must be notarised by a notary public in all cases.

DIt must be signed by both the grantor and the holder on the last page.

💡 The text mentions notarisation and then clarifies: 'This requirement varies among different entities and intermediaries. For example, some mutual funds may require the PoA to be notarized, while a PoA to operate a demat account needs to notarized only if the depository participant so requires.' This indicates it's not mandatory in all cases. Options A, B, and D are listed as definite requirements.

Q92 MCQ · 1 mark MediumPower of Attorney

Which of the following actions is an Attorney, or holder of a Power of Attorney (PoA), explicitly PROHIBITED from performing on behalf of the grantor, as per the provided text?

ASettling claims related to the grantor's investments.

BMaking an initial investment in a mutual fund scheme.

✓Appointing a nominee for the grantor's investment.

DSelling securities held in the grantor's demat account.

💡 The text explicitly states: 'However, the attorney cannot appoint a nominee for the investment' and 'A PoA holder cannot make or change nominations in an account or investment.' Other options like settling claims, making initial investments, and selling securities are generally within the scope of actions allowed for a PoA holder.

Q93 MCQ · 1 mark MediumRepatriation of Funds

For Non-Resident Indian (NRI) investments, what is the primary factor that determines whether investment proceeds on sale or redemption of units are repatriable?

AThe total value of the investment.

BThe duration for which the investment was held.

✓The source of the funds from which the original investment was made.

DThe type of security in which the investment was made.

💡 The text states, 'Repatriation norms vary depending upon the source of the funds from which the original investment was made.'

Q94 MCQ · 1 mark MediumDematerialisation Characteristics

What does it mean for dematerialised securities to be 'fungible'?

AThey can be converted back to physical form at any time.

✓They do not have a distinctive identity in terms of share certificate number or folio numbers.

CThey are easily transferable between different depositories.

DThey are always identified by their original physical certificate numbers.

Q95 MCQ · 1 mark HardPower of Attorney Execution Abroad

When a Power of Attorney (PoA) is executed abroad, which of the following is a correct requirement for its validity in India?

AIt must be typed on a non-judicial stamp paper from the country of execution.

✓It must be attested by a designated official of the Indian embassy abroad or a notary abroad.

COnly the grantor's signature is required on the last page before sending to India.

DIt is not required to be stamped or notarized in India if already done abroad.

Q96 MCQ · 1 mark EasyDematerialisation Basics

Which of the following best describes the primary function of a depository in the context of securities?

ATo provide financial advice to investors for security transactions.

✓To hold securities of investors in electronic form and facilitate transactions.

CTo underwrite public issues of companies.

DTo regulate the stock market and ensure fair trading practices.

Q97 MCQ · 1 mark MediumDematerialisation Process

During the dematerialisation process, which of the following is NOT a verification step performed by the R&T agent?

AEnsuring the Dematerialisation Request Form (DRF) has the DP’s authorization.

BVerifying that the physical documents match the electronic request’s Dematerialisation Request Number (DRN).

✓Confirming that the investor's bank account details match the records.

DChecking for distinguishing marks such as hologram/water mark on the certificates.

💡 The text lists the R&T agent's verification steps, which include options A, B, and D. There is no mention of the R&T agent verifying the investor's bank account details during the dematerialisation process.

Q98 MCQ · 1 mark MediumDematerialisation Regulations

As per SEBI Regulations, what is the requirement for public issues whose size exceeds Rs. 10 crores?

AThey must be issued only in physical form.

✓They must be issued only in dematerialised form.

CInvestors have the option to choose between physical and dematerialised form, regardless of size.

DThey must be issued through a specific government-owned depository.

💡 SEBI Regulations requires all public issues whose size is in excess of Rs. 10 crores to be issued only in dematerialised form.

Q99 MCQ · 1 mark MediumNRI Investments and Repatriation

An NRI investor makes two separate investments in India. One investment is funded from income earned in foreign currency, and the other is funded from income earned in Indian Rupees. What is the repatriation status of the proceeds from these investments upon sale or redemption?

ABoth investments' proceeds can be freely repatriated outside India.

✓Proceeds from the investment funded by foreign currency are repatriable, but those from Indian Rupee funds are non-repatriable.

CBoth investments' proceeds are non-repatriable because the rupee is not fully convertible on capital account.

DThe repatriation status depends on the investor's residential status at the time of sale, not the source of funds.

💡 The text states: 'If the source of funds for an NRI investment is foreign currency, it can be freely taken outside the country; that is, it is repatriable. If the source of funds is Indian Rupees, it is non-repatriable.' It also clarifies that 'Investment made from these two sources of income cannot be clubbed together.'

Q100 MCQ · 1 mark EasyDepository Services

Which of the following best describes the primary function of a depository in the context of securities?

AIt provides loans to investors for purchasing securities.

✓It holds the securities of investors in electronic form.

CIt acts as a regulator for the stock market.

DIt offers insurance against market risks for securities.

💡 As per the text, 'A depository is an institution that offers the service of holding the securities of the investors in electronic form.'

Q101 MCQ · 1 mark MediumPower of Attorney Limitations

Which of the following actions is an Attorney, or holder of a Power of Attorney (PoA), explicitly *prohibited* from performing on behalf of the grantor?

APurchasing securities.

BSettling transactions.

✓Appointing a nominee for an investment.

DMaking payments for purchases.

💡 The text states, 'However, the attorney cannot appoint a nominee for the investment.' and 'A PoA holder cannot make or change nominations in an account or investment.'

Q102 MCQ · 1 mark HardNRI Residential Status

As per Section 6 of the Income-tax Act, an individual who is a citizen of India and is outside India, comes on a visit to India during the previous year. Which condition for being deemed a resident in India does NOT apply to this individual?

ABeing in India for 182 days or more during the previous year.

BBeing in India for 60 days or more during the previous year.

✓Being in India for 365 days or more during 4 years immediately preceding the previous year, in conjunction with the 60-day rule.

DBoth A and B do not apply.

💡 The text states: 'However, condition No. 2 (mentioned above) does not apply where an individual being citizen of India or a person of Indian origin, who being outside India, comes on a visit to India during the previous year.' Condition No. 2 is: 'If he is in India for a period of 60 days or more during the previous year and 365 days or more during 4 years immediately preceding the previous year.' Therefore, the 365-day part of this combined condition also does not apply.

Q103 MCQ · 1 mark EasyDematerialisation Basics

As per the Depositories Act, 1996, how many depositories are currently operational in India?

AOne

✓Two

CThree

DFour

💡 The text states, 'There are currently two depositories operational in India, National Securities Depository Ltd. (NSDL) & Central Depository Services (I) Ltd. (CDSL).'

Q104 MCQ · 1 mark EasyDematerialisation Eligibility

According to SEBI Regulations, public issues exceeding a certain size are required to be issued only in dematerialised form. What is this threshold?

ARs. 5 crores

✓Rs. 10 crores

CRs. 25 crores

DRs. 50 crores

💡 The text states: 'SEBI Regulations requires all public issues whose size is in excess of Rs. 10 crores to be issued only in dematerialised form.'

Q105 MCQ · 1 mark HardPower of Attorney (PoA) Validity

For a Power of Attorney (PoA) to be valid, which of the following is a requirement that may vary among different entities and intermediaries?

AIt must be signed by two witnesses.

BIt must be executed on a judicial stamp paper.

✓It must be notarised by a notary public.

DIt must be registered with the local court.

Q106 MCQ · 1 mark MediumRematerialisation Process

In the process of rematerialisation, what happens to the investor's account in the records of the depository?

AIt shows an increase to the extent of rematerialisation.

✓It shows a reduction to the extent of rematerialisation.

CIt remains unchanged as the securities are only converted to physical form.

DIt is closed permanently after the process is complete.

💡 The text states, 'In the records of the depository, the investor’s account will show a reduction to the extent of rematerialization.'

Q107 MCQ · 1 mark MediumPower of Attorney Validity

Which of the following is a mandatory requirement for a Power of Attorney (PoA) to be valid, as specified in the text?

AIt must be typed on a plain paper.

BIt must be signed by the grantor on the last page only.

✓It must be stamped according to the rules applicable in the state in which it is executed.

DIt must always be notarised by a notary public, without exception.

💡 The text lists validity requirements including: 'Stamped according to the rules applicable in the state in which it is executed.' Other options are incorrect as PoA must be on non-judicial stamp paper, signed by grantor on all pages, and notarization requirement varies.

Q108 MCQ · 1 mark MediumDematerialisation Rejection

Which of the following is NOT a valid reason for a dematerialisation request to be fully or partially rejected?

AMismatch in information between the DRF and physical certificates.

BCertificates are fake, stolen, or duplicates have been issued.

CThe securities do not pertain to the issuer/R&T agent.

✓The investor's account with the DP has insufficient balance.

💡 The text lists reasons for rejection such as 'Mismatch in the information between the DRF and physical certificates', 'Certificates are fake, stolen or for which duplicates have been issued', 'Securities stand in a different name(s) from that mentioned in the DRF', 'The Securities do not pertain to the issuer/R&T agent', and 'Signature of the holders does not tally with the records of the R&T agent'. Insufficient balance in the DP account is not mentioned as a reason for rejecting a dematerialisation request.

Q109 MCQ · 1 mark EasyNRI Residential Status

Under Section 6 of the Income-tax Act, an individual is deemed to be a resident in India if they are in India for a period of 60 days or more during the previous year AND what other condition?

A90 days or more during the 2 years immediately preceding the previous year.

B120 days or more during the 3 years immediately preceding the previous year.

C182 days or more during the 4 years immediately preceding the previous year.

✓365 days or more during the 4 years immediately preceding the previous year.

💡 The text states, 'If he is in India for a period of 60 days or more during the previous year and 365 days or more during 4 years immediately preceding the previous year.'

Q110 MCQ · 1 mark MediumDematerialised Securities Features

What does it mean for dematerialised securities to be 'fungible' as described in the text?

AThey can be converted back to physical form at any time without restriction.

✓They do not have a distinctive identity in terms of share certificate number or folio numbers once dematerialised.

CThey can only be traded on specific stock exchanges.

DThey are subject to a fixed rate of stamp duty upon transfer.

💡 The text states: 'The dematerialised securities are fungible. This means that once a share is dematerialised, it does not have a distinctive identity in terms of share certificate number or distinctive numbers or folio numbers.'

Q111 MCQ · 1 mark HardPower of Attorney

An investor, Mr. Sharma, grants a Power of Attorney (PoA) to his financial advisor, Ms. Gupta. According to the NISM regulations, which of the following actions can Ms. Gupta NOT perform on behalf of Mr. Sharma, even if explicitly mentioned in the PoA?

APurchase and sell securities.

BSettle transactions and initiate redemptions.

✓Open a new demat account for Mr. Sharma.

DManage Mr. Sharma's real estate and other property affairs if a General PoA is granted.

💡 The text states that PoA holders 'can do normal transactions such as purchase, payment for purchase, sale, settlement of transactions and redemptions,' making A and B permissible. Under a General Power of Attorney, an agent typically has authority for 'Buying, selling, or managing real estate and other property,' making D permissible. However, the text explicitly states, 'A PoA holder cannot open or close a bank or a demat account. The signatures of the holders of the account are necessary for this.' Therefore, Ms. Gupta cannot open a new demat account for Mr. Sharma.

Q112 MCQ · 1 mark MediumDematerialisation Regulations

As per SEBI Regulations, what is the minimum size for public issues to be mandatorily issued only in dematerialised form?

ARs. 5 crores

✓Rs. 10 crores

CRs. 15 crores

DRs. 20 crores

💡 The text states, "SEBI Regulations requires all public issues whose size is in excess of Rs. 10 crores to be issued only in dematerialised form."

Q113 MCQ · 1 mark HardNRI Investments

An individual, classified as a Non-Resident Indian (NRI), makes an investment in India using funds earned in Indian Rupees from a source within India. Which of the following statements regarding the repatriation of proceeds from this investment is correct?

AThe investment proceeds can be freely repatriated as foreign currency, irrespective of the source of funds.

✓The investment proceeds are non-repatriable because the Indian Rupee is not fully convertible on the capital account.

CThe investment proceeds can be repatriated only if the NRI has also made an equivalent investment using foreign currency.

DThe investment proceeds are repatriable, but only after a lock-in period specified by the RBI.

💡 The text states, 'If the source of funds is Indian Rupees, it is non-repatriable.' It further explains, 'The reason for the rupee investment proceeds being non-repatriable is that since the rupee is not fully convertible on capital account, RBI norms do not permit investment in Indian rupees to be freely converted to other world currencies and to be taken out in foreign currency.'

Q114 MCQ · 1 mark EasyDematerialisation Regulations

SEBI Regulations require all public issues whose size exceeds a certain amount to be issued only in dematerialised form. What is this amount?

ARs. 5 crores

✓Rs. 10 crores

CRs. 25 crores

DRs. 50 crores

💡 The text explicitly states, 'SEBI Regulations requires all public issues whose size is in excess of Rs. 10 crores to be issued only in dematerialised form.'

Q115 MCQ · 1 mark HardDematerialisation Process

During the dematerialisation process, which entity is responsible for mutilating the physical certificates by marking them 'Surrendered for Dematerialisation' and subsequently destroying them after the process is complete?

AThe Depository Participant (DP)

BThe Depository

CThe Investor

✓The Registrar and Transfer (R&T) agent

💡 The text outlines the steps: 'The certificates received by the R&T agent will be mutilated and have the words ‘Surrendered for Dematerialisation” on it.' And later, 'The R&T agent mutilates the physical certificates once the process of dematerialisation is complete.'

Q116 MCQ · 1 mark EasyDepositories in India

How many depositories are currently operational in India as per the provided text?

AOne

✓Two

CThree

DFour

💡 The text states, 'There are currently two depositories operational in India, National Securities Depository Ltd. (NSDL) & Central Depository Services (I) Ltd. (CDSL).'

Q117 MCQ · 1 mark MediumPower of Attorney Validity

Which of the following is NOT a mandatory requirement for a Power of Attorney (PoA) to be valid, as per the text?

ASigned by the grantor on all pages.

✓Notarised by a notary public in all cases.

CTyped on a non-judicial stamp paper.

DStamped according to the rules applicable in the state of execution.

💡 The text indicates that notarization 'varies among different entities and intermediaries' and is not required in 'all cases'. For example, 'a PoA to operate a demat account needs to notarized only if the depository participant so requires.' The other options are listed as general requirements for validity.

Q118 MCQ · 1 mark EasyDepositories in India

How many depositories are currently operational in India, as per the provided text?

AOne

✓Two

CThree

DFour

💡 The text explicitly states, 'There are currently two depositories operational in India, National Securities Depository Ltd. (NSDL) & Central Depository Services (I) Ltd. (CDSL).'

Q119 MCQ · 1 mark EasyRematerialisation

What is the primary purpose of rematerialisation of securities?

✓To convert electronic holdings of securities into physical form.

BTo convert physical securities into electronic form.

CTo transfer securities from one demat account to another.

DTo consolidate multiple physical share certificates into a single electronic entry.

💡 The text defines rematerialisation clearly: 'Rematerialisation of securities is the process of converting the electronic holding of a security to physical form.' Option B describes dematerialisation. Options C and D describe other types of transactions or processes within the securities market, not rematerialisation.

Q120 MCQ · 1 mark MediumNRI Definition (Income Tax Act)

As per Section 6 of the Income-tax Act, an individual is deemed to be resident in India if they are in India for a period of 60 days or more during the previous year AND for how many days or more during the 4 years immediately preceding the previous year?

A90 days

B182 days

C270 days

✓365 days

💡 The text states: 'If he is in India for a period of 60 days or more during the previous year and 365 days or more during 4 years immediately preceding the previous year.'

Q121 MCQ · 1 mark MediumNRI Residential Status (Income Tax Act)

Under Section 6 of the Income Tax Act, an individual is deemed to be a resident in India if they are in India for 60 days or more during the previous year and for how many days or more during the 4 years immediately preceding the previous year?

A182 days

✓365 days

C730 days

D120 days

💡 The text states, 'If he is in India for a period of 60 days or more during the previous year and 365 days or more during 4 years immediately preceding the previous year.'

Q122 MCQ · 1 mark MediumPower of Attorney Validity

Which of the following is a mandatory requirement for a Power of Attorney (PoA) to be considered valid in India, as per the text?

AIt must be executed on a plain paper, regardless of where it is executed.

BIt must be signed by the grantor only on the last page.

✓It must be typed on a non-judicial stamp paper.

DIt must always be notarized by a notary public, without exception.

💡 The text lists validity requirements: 'To be valid the PoA must be: * Typed on a non-judicial stamp paper.' Option D is incorrect because it states notarization 'varies among different entities and intermediaries.'

Q123 MCQ · 1 mark MediumNRI Investments

Mr. Ajay, a Non-Resident Indian (NRI), makes an investment in India using funds sourced from his earnings in Indian Rupees within India. Which of the following statements is TRUE regarding the repatriation of proceeds from this investment?

AThe investment proceeds can be freely repatriated outside India in foreign currency.

✓The investment proceeds are non-repatriable because the rupee is not fully convertible on capital account.

CThe investment proceeds can be repatriated only if the initial investment amount exceeds a specific threshold.

DThe repatriation norms depend on the duration for which the investment was held.

💡 The text clarifies that 'If the source of funds is foreign currency, it can be freely taken outside the country; that is, it is repatriable. If the source of funds is Indian Rupees, it is non-repatriable.' It further explains, 'The reason for the rupee investment proceeds being non-repatriable is that since the rupee is not fully convertible on capital account, RBI norms do not permit investment in Indian rupees to be freely converted to other world currencies and to be taken out in foreign currency.' This makes B the correct statement, while A, C, and D are incorrect as per the provided text.

Q124 MCQ · 1 mark HardDematerialisation Rejection

All of the following are valid reasons for a dematerialisation request to be rejected, EXCEPT:

✓The physical certificates have distinguishing marks such as a hologram or watermark.

BThere is a mismatch in the information between the Dematerialisation Request Form (DRF) and the physical certificates.

CThe securities stand in a different name(s) from that mentioned in the DRF.

DThe signature of the holders does not tally with the records of the R&T agent.

💡 The R&T agent *verifies* that 'The certificates have the distinguishing marks such as hologram/water mark.' This is a condition for *acceptance* of the request, not a reason for rejection. Mismatch in information, different names, and signature not tallying are explicitly listed as reasons for rejection.

Q125 MCQ · 1 mark EasyDematerialisation Basics

What is the primary function of a depository in the context of securities?

ATo provide financial advice to investors.

✓To hold securities of investors in electronic form.

CTo facilitate physical transfer of securities.

DTo underwrite public issues of companies.

💡 As per the text, 'A depository is an institution that offers the service of holding the securities of the investors in electronic form.'

Q126 MCQ · 1 mark HardDematerialisation Process and Fungibility

Which statement accurately describes a characteristic of dematerialised securities?

AThey retain a distinctive identity based on share certificate number or folio numbers.

✓They are identified in terms of the ISIN and the number of shares, and are fungible.

CStamp duty is payable on dematerialisation, similar to other transfer of ownership transactions.

DThe R&T agent makes a debit entry in the electronic records of the depository upon dematerialisation.

💡 The text states, 'The dematerialised securities are fungible. This means that once a share is dematerialised, it does not have a distinctive identity in terms of share certificate number or distinctive numbers or folio numbers. The investor’s ownership of the security is described in terms of number of shares held. In the depository, the dematerialised securities are identified in terms of the ISIN and the number of shares.' It also clarifies that 'no stamp duty is payable on dematerialisation' and 'a credit entry is made in the electronic records of the depository'.

Q127 MCQ · 1 mark MediumDematerialisation Process

During the dematerialisation process, what specific words are required to be mutilated on the physical certificates received by the R&T agent?

A'Cancelled for Dematerialisation'

B'Destroyed for Electronic Conversion'

✓'Surrendered for Dematerialisation'

D'Invalid for Physical Holding'

💡 The text states: 'The certificates received by the R&T agent will be mutilated and have the words ‘Surrendered for Dematerialisation” on it.'

Q128 MCQ · 1 mark MediumPower of Attorney

Which of the following actions can a Power of Attorney (PoA) holder NOT perform on behalf of the grantor?

APurchase and sale of securities

BSettlement of transactions

✓Appointing a nominee for an investment

DPayment for purchase of investments

💡 The text explicitly states, "However, the attorney cannot appoint a nominee for the investment." and "A PoA holder cannot make or change nominations in an account or investment." Other actions like purchase, payment, sale, and settlement are generally allowed.

Q129 MCQ · 1 mark EasyDematerialisation Characteristics

What does it mean when the text states that 'dematerialised securities are fungible'?

AThey can be converted back to physical form at any time.

✓They do not have a distinctive identity in terms of share certificate number or distinctive numbers.

CThey can only be traded on specific exchanges.

DThey are always issued with a specific maturity date.

💡 The text explains fungibility: 'This means that once a share is dematerialised, it does not have a distinctive identity in terms of share certificate number or distinctive numbers or folio numbers.'

Q130 MCQ · 1 mark EasyDematerialisation Characteristics

What does it mean for dematerialised securities to be 'fungible'?

AThey can be converted back to physical form easily.

✓They do not have a distinctive identity in terms of share certificate or folio numbers.

CThey can only be traded on specific stock exchanges.

DThey are subject to stamp duty upon transfer.

💡 The text explains: 'The dematerialised securities are fungible. This means that once a share is dematerialised, it does not have a distinctive identity in terms of share certificate number or distinctive numbers or folio numbers.'

Q131 MCQ · 1 mark HardDematerialisation Process

An investor submits a Dematerialisation Request Form (DRF) along with physical certificates to their Depository Participant (DP). Which of the following, if discovered by the R&T agent during verification, would lead to the REJECTION of the dematerialisation request?

AThe physical certificates have the words ‘Surrendered for Dematerialisation’ mutilated on them by the R&T agent.

BThe dematerialisation request has been received by the R&T agent in both electronic and physical forms.

✓The signature of the holder on the DRF does not tally with the records maintained by the R&T agent.

DThe Register of Members (RoM) of the company is updated to include the depository's name.

💡 The text lists 'Signature of the holders does not tally with the records of the R&T agent' as a reason for rejection. Option A describes a step taken by the R&T agent *after* verification and *before* final processing. Option B is a *requirement* for processing, not a reason for rejection. Option D describes a step taken *after* successful dematerialisation.

Q132 MCQ · 1 mark HardPower of Attorney Validity

According to the text, which of the following is *not* a universal requirement for a Power of Attorney (PoA) to be considered valid in India?

AIt must be typed on a non-judicial stamp paper.

BIt must be signed by the grantor on all pages.

✓It must be notarised by a notary public in all cases.

DIt must be stamped according to the rules applicable in the state of execution.

💡 The text states, 'Notarised by a notary public. This requirement varies among different entities and intermediaries. For example, some mutual funds may require the PoA to be notarized, while a PoA to operate a demat account needs to notarized only if the depository participant so requires.' This indicates that notarisation is not a universal requirement in all cases, unlike the other options which are presented as general validity requirements.

Q133 MCQ · 1 mark MediumPower of Attorney validity

For a Power of Attorney (PoA) to be valid, which of the following is NOT always a mandatory requirement as per the text?

ASigned by the grantor on all pages.

BTyped on a non-judicial stamp paper.

✓Notarised by a notary public.

DStamped according to the rules applicable in the state.

💡 The text states regarding notarisation, "This requirement varies among different entities and intermediaries. For example, some mutual funds may require the PoA to be notarized, while a PoA to operate a demat account needs to notarized only if the depository participant so requires." This indicates it is not *always* a mandatory requirement.

Q134 MCQ · 1 mark EasyRematerialisation Definition

What is the process of converting the electronic holding of a security back into physical form called?

ADematerialisation

✓Rematerialisation

CReconstitution

DDigitalisation

💡 The text defines rematerialisation as "the process of converting the electronic holding of a security to physical form."

Q135 MCQ · 1 mark EasyDematerialisation Regulations

As per SEBI Regulations, public issues exceeding what size are required to be issued only in dematerialised form?

ARs. 1 crore

BRs. 5 crores

✓Rs. 10 crores

DRs. 50 crores

💡 The text explicitly states, 'SEBI Regulations requires all public issues whose size is in excess of Rs. 10 crores to be issued only in dematerialised form.'

Q136 MCQ · 1 mark MediumPower of Attorney Limitations

Which of the following actions can a Power of Attorney (PoA) holder NOT perform on behalf of the grantor, as per the provided text?

APurchase investments.

BSettle transactions.

✓Appoint a nominee for the investment.

DRedeem investments.

💡 The text explicitly states: 'However, the attorney cannot appoint a nominee for the investment.' and 'A PoA holder cannot make or change nominations in an account or investment.'

Q137 MCQ · 1 mark MediumDematerialisation Process

In the process of dematerialisation, what is the role of the R&T agent once the physical certificates are received and verified?

ATo return the physical certificates to the investor after verification.

BTo destroy the physical certificates immediately upon receipt.

✓To mutilate the certificates with the words 'Surrendered for Dematerialisation' and verify details before further processing.

DTo issue new physical certificates in electronic form.

💡 The text states, 'The certificates received by the R&T agent will be mutilated and have the words ‘Surrendered for Dematerialisation” on it. The R&T agent has to verify that... The R&T agent will verify the physical documents with the details in the covering letter and DRF and forward the documents for dematerialisation.'

Q138 MCQ · 1 mark EasyPower of Attorney

Which of the following actions is explicitly stated as *not* allowed for a Power of Attorney (PoA) holder?

APurchase of securities on behalf of the grantor.

BSale of securities on behalf of the grantor.

✓Appointing a nominee for the investment.

DSettlement of transactions on behalf of the grantor.

💡 The text clearly states, 'However, the attorney cannot appoint a nominee for the investment.' and 'A PoA holder cannot make or change nominations in an account or investment.'

Q139 MCQ · 1 mark MediumNRI Investment Repatriation

As per the text, what is the repatriation status of investment proceeds for Non-Resident Indians (NRIs) if the original source of funds was Indian Rupees?

AFreely repatriable to any foreign country.

BRepatriable only to specific countries approved by RBI.

✓Non-repatriable, as the rupee is not fully convertible on capital account.

DRepatriable after a lock-in period of 5 years.

💡 The text states, 'If the source of funds is Indian Rupees, it is non-repatriable.' and elaborates, 'The reason for the rupee investment proceeds being non-repatriable is that since the rupee is not fully convertible on capital account, RBI norms do not permit investment in Indian rupees to be freely converted to other world currencies and to be taken out in foreign currency.'

Q140 MCQ · 1 mark MediumDematerialisation Process

Which of the following is NOT a valid reason for the R&T agent to reject a dematerialisation request, as per the provided text?

AMismatch in the information between the Dematerialisation Request Form (DRF) and physical certificates.

BThe securities stand in a different name(s) from that mentioned in the DRF.

✓The investor's account with the Depository Participant (DP) does not have sufficient balance.

DThe signature of the holders does not tally with the records of the R&T agent.

💡 The chapter lists specific reasons for rejection of a dematerialisation request, including mismatch in information, fake/stolen certificates, securities in different names, not pertaining to the issuer, or signature mismatch. The investor's account balance with the DP is not mentioned as a reason for rejection of a dematerialisation request in the text.

Q141 MCQ · 1 mark MediumRematerialisation Process

During the rematerialisation process, after the Depository Participant (DP) validates the investor's request and forwards it electronically, which entity is responsible for assigning a new certificate number and distinctive numbers for the shares?

AThe Depository

BThe Investor's Bank

✓The Registrar and Transfer (R&T) agent

DThe Securities and Exchange Board of India (SEBI)

💡 The text states, 'The R&T agent will assign a new certificate number and distinctive numbers from the set of shares already dematerialised.'

Q142 MCQ · 1 mark MediumRematerialisation Process

During the rematerialisation process, what specific action does the R&T agent take regarding certificate numbers and distinctive numbers?

AReuses the original certificate numbers from before dematerialisation.

✓Assigns a new certificate number and distinctive numbers from the set of shares already dematerialised.

CRequests the investor to provide new certificate numbers.

DDoes not assign any certificate numbers as the securities remain electronic.

💡 The text states: 'The R&T agent will assign a new certificate number and distinctive numbers from the set of shares already dematerialised.'

Q143 MCQ · 1 mark MediumDematerialisation Process

Which of the following is NOT a valid reason for the rejection of a dematerialisation request by the R&T agent?

AMismatch in information between the Dematerialisation Request Form (DRF) and physical certificates.

BThe securities stand in a different name(s) from that mentioned in the DRF.

✓The Dematerialisation Request Number (DRN) in the physical documents matches with the DRN in the electronic request.

DThe signature of the holders does not tally with the records of the R&T agent.

💡 The R&T agent is required to verify that 'The DRN in the physical documents matches with the DRN in the electronic request.' If this condition is met, it facilitates dematerialisation; it is not a reason for rejection. The other options are explicitly listed as reasons for rejection.

Q144 MCQ · 1 mark HardDematerialisation Process Details

During the dematerialisation process, what critical step is taken by the R&T agent regarding the Register of Members (RoM) of the company?

AThe investor's name is retained in the RoM, with a special notation for dematerialised securities.

BThe R&T agent creates a new RoM exclusively for dematerialised securities.

✓The depository's name is included in the RoM in place of the investor to the extent of securities dematerialised.

DThe RoM is completely digitalised and no longer maintained in physical form by the R&T agent.

💡 The text states: 'In the Register of Members (RoM) of the company, the depository’s name is included in the place of the investor to the extent of securities dematerialised.'

Q145 MCQ · 1 mark HardPower of Attorney

Which of the following statements about a Power of Attorney (PoA) holder's rights and limitations is correct, as per the provided text?

AA PoA holder can open or close a bank account on behalf of the grantor.

BThe grantor of a PoA cannot operate the account once a PoA has been granted.

CA PoA holder is authorized to appoint a nominee for the investment.

✓A PoA holder can make initial investments and subsequent purchases in mutual funds on behalf of the grantor.

💡 The text explicitly states: 'The attorney cannot appoint a nominee for the investment.' (Option C is incorrect). 'The grantor of power of attorney can continue to operate the account even after giving a power of attorney.' (Option B is incorrect). 'A PoA holder cannot open or close a bank or a demat account.' (Option A is incorrect). The text states, 'In case of investments such as mutual funds, POS schemes, the PoA holder can make the initial investments and subsequent purchases and operate the account on behalf of the grantor.' (Option D is correct).

Q146 MCQ · 1 mark MediumRematerialisation

During the rematerialisation of securities, which entity is responsible for assigning a new certificate number and distinctive numbers from the set of shares already dematerialised?

AThe Depository Participant (DP)

BThe Depository

✓The Registrar and Transfer (R&T) agent

DThe investor

💡 The text explicitly states under the steps for rematerialisation: 'The R&T agent will assign a new certificate number and distinctive numbers from the set of shares already dematerialised.'

Q147 MCQ · 1 mark EasyNRI Investments

If an NRI's investment in India originated from funds earned in foreign currency, what is the repatriation status of the proceeds on sale or redemption?

AIt is non-repatriable due to RBI norms.

✓It can be freely taken outside the country.

CIt is repatriable only with prior approval from RBI.

DIt depends on the duration of the investment.

💡 The text states, 'If the source of funds for an NRI investment is foreign currency, it can be freely taken outside the country; that is, it is repatriable.'

Q148 MCQ · 1 mark HardNRI Residential Status Exception

When does the condition (60 days or more in previous year AND 365 days or more in 4 preceding years) for determining residential status under Section 6 of the Income-tax Act NOT apply?

AWhen the individual is a foreign national visiting India for medical treatment.

✓When the individual is an Indian citizen or a person of Indian origin who comes on a visit to India during the previous year.

CWhen the individual is a spouse of an Indian citizen residing abroad.

DWhen the individual is a student pursuing higher education in India.

💡 The text clarifies, 'However, condition No. 2 (mentioned above) does not apply where an individual being citizen of India or a person of Indian origin, who being outside India, comes on a visit to India during the previous year.'

Q149 MCQ · 1 mark MediumDematerialisation rejection reasons

Which of the following is NOT a valid reason for a dematerialisation request to be fully or partially rejected, as per the provided text?

AMismatch in information between DRF and physical certificates.

BCertificates are fake or stolen.

✓The investor's account has insufficient balance.

DSignature of the holders does not tally with R&T agent records.

💡 The text lists several reasons for rejection, including "Mismatch in the information between the DRF and physical certificates," "Certificates are fake, stolen or for which duplicates have been issued," and "Signature of the holders does not tally with the records of the R&T agent." Insufficient account balance is not mentioned as a reason for dematerialisation rejection.

Q150 MCQ · 1 mark MediumDematerialisation Eligibility

Which of the following is NOT explicitly mentioned as a category of security eligible for dematerialisation under the SEBI (Depository and Participants) Regulations of 1996 in the provided text?

AUnits of a mutual fund

BGovernment securities

✓Bank fixed deposits

DUnlisted securities

💡 The text lists eligible securities as 'Shares, scrips, stocks, bonds, debentures, debenture stock or other marketable security of any incorporated company or other body corporate' and 'Units of a mutual fund, rights under a collective investment scheme, venture capital funds, certificates of deposit, commercial paper, money market instruments, government securities and unlisted securities.' Bank fixed deposits are not mentioned.

Q151 MCQ · 1 mark MediumNRI Residential Status

According to Section 6 of the Income Tax Act, an individual is deemed to be a resident in India if they satisfy either of two conditions. One condition is being in India for 182 days or more during the previous year. What is the other condition?

ABeing in India for 90 days or more during the previous year and 180 days or more during 4 years immediately preceding.

✓Being in India for 60 days or more during the previous year and 365 days or more during 4 years immediately preceding the previous year.

CBeing in India for 120 days or more during the previous year and 240 days or more during 3 years immediately preceding.

DBeing in India for 150 days or more during the previous year and 300 days or more during 2 years immediately preceding.

💡 The text explicitly states the second condition: 'If he is in India for a period of 60 days or more during the previous year and 365 days or more during 4 years immediately preceding the previous year.'

Q152 MCQ · 1 mark MediumDematerialisation Eligibility

Which of the following categories of securities is NOT explicitly mentioned as eligible for dematerialisation under SEBI (Depository and Participants) Regulations of 1996 in the provided text?

AShares, scrips, stocks, bonds, debentures.

BUnits of a mutual fund, rights under a collective investment scheme.

CVenture capital funds, certificates of deposit, commercial paper.

✓Real estate investment trust units.

💡 The text lists various eligible securities, but 'Real estate investment trust units' are not among them.

Q153 MCQ · 1 mark EasyDematerialisation Basics

What is the primary function of a depository as described in the chapter?

ATo provide loans to investors against their securities.

✓To hold investors' securities in electronic form.

CTo facilitate physical transfer of share certificates.

DTo act as a regulatory body for stock exchanges.

💡 As stated in section 17.3, 'A depository is an institution that offers the service of holding the securities of the investors in electronic form.' Its services are compared to a bank holding depositors' funds.

Q154 MCQ · 1 mark EasyNRI Investment Repatriation

According to the text, what determines whether the investment proceeds from an NRI investment are repatriable or non-repatriable?

AThe duration of the investment.

BThe type of security purchased (e.g., equity vs. debt).

✓The source of the funds from which the original investment was made.

DThe current market value of the investment.

💡 The text states, 'Repatriation norms vary depending upon the source of the funds from which the original investment was made.' It further clarifies that if the source is foreign currency, it's repatriable, and if it's Indian Rupees, it's non-repatriable.

Q155 MCQ · 1 mark EasyIndian Depositories

How many depositories are currently operational in India, as per the text?

AOne

✓Two

CThree

DFour

💡 The text mentions, 'There are currently two depositories operational in India, National Securities Depository Ltd. (NSDL) & Central Depository Services (I) Ltd. (CDSL).'

Q156 MCQ · 1 mark EasyDematerialisation Basics

Which of the following best describes the primary function of a depository in India?

ATo provide loans against securities held in physical form.

BTo act as a custodian for physical share certificates.

✓To hold securities of investors in electronic form and facilitate transactions.

DTo regulate the issuance of new securities by companies.

Q157 MCQ · 1 mark EasyDepositories in India

How many depositories are currently operational in India as per the provided text?

AOne

✓Two

CThree

DFour

💡 The text mentions, 'There are currently two depositories operational in India, National Securities Depository Ltd. (NSDL) & Central Depository Services (I) Ltd. (CDSL).'

Q158 MCQ · 1 mark EasyDematerialisation

According to the Depositories Act, 1996, what happens to the physical securities once they are dematerialised?

AThey are returned to the investor for safekeeping.

BThey are stored by the depository for a period of 10 years.

✓They are destroyed by the R&T agent.

DThey are converted into digital images and archived.

💡 As per the Depositories Act, 1996, the physical securities that are dematerialised are required to be destroyed by the R&T agent and a credit entry is made in the electronic records of the depository.

Q159 MCQ · 1 mark HardNRI Definition (Income Tax Act)

As per Section 6 of the Income Tax Act, under which circumstance would an individual, who is a citizen of India, definitely be considered a 'resident in India' for the previous year?

AIf they are in India for a period of 60 days during the previous year and 300 days during the 4 years immediately preceding the previous year.

BIf they are in India for a period of 180 days during the previous year.

CIf they are in India for a period of 70 days during the previous year, having come on a visit, and 400 days during the 4 years immediately preceding the previous year.

✓If they are in India for a period of 182 days or more during the previous year.

💡 The text states an individual is deemed resident if they satisfy '1. If he is in India for a period of 182 days or more during the previous year; or 2. If he is in India for a period of 60 days or more during the previous year and 365 days or more during 4 years immediately preceding the previous year.' Option D directly matches condition 1. Option B (180 days) is less than 182. Option A does not meet the 365 days in 4 years condition. Option C involves the exception for visiting citizens, which nullifies condition 2, meaning only condition 1 (182 days or more) would apply, and 70 days is less than 182.

Q160 MCQ · 1 mark HardNRI Investment Repatriation

An individual who is an NRI makes an investment in India. Which of the following statements regarding the repatriation of investment proceeds is accurate?

AAll investment proceeds from an NRI's investment in India are freely repatriable, regardless of the source of funds.

✓If the source of funds for the original investment was Indian Rupees, the proceeds are generally non-repatriable.

CInvestment made from foreign currency and Indian Rupees can be clubbed together for repatriation purposes.

DRepatriation norms are determined solely by the investor's residential status at the time of sale, not the source of funds.

💡 The text states: 'Repatriation norms vary depending upon the source of the funds from which the original investment was made. ... If the source of funds for an NRI investment is foreign currency, it can be freely taken outside the country; that is, it is repatriable. If the source of funds is Indian Rupees, it is non-repatriable. Investment made from these two sources of income cannot be clubbed together.'

Q161 MCQ · 1 mark EasyDepositories

How many depositories are currently operational in India as per the provided text?

AOne

✓Two

CThree

DFour

💡 The text states, "There are currently two depositories operational in India, National Securities Depository Ltd. (NSDL) & Central Depository Services (I) Ltd. (CDSL)."

Q162 MCQ · 1 mark MediumNRI Investments and Repatriation

An individual who is a citizen of India, living outside India, makes an investment in India using funds sourced from their foreign currency earnings. Based on the provided text, what is the repatriation status of the proceeds from this investment?

AThe proceeds are non-repatriable because the rupee is not fully convertible on capital account.

✓The proceeds are freely repatriable as the source of funds was foreign currency.

CThe repatriation status depends on the specific type of security invested in.

DThe proceeds can be repatriated only if clubbed with investments made from Indian Rupee earnings.

💡 Section 17.5 states, 'If the source of funds for an NRI investment is foreign currency, it can be freely taken outside the country; that is, it is repatriable.' It also clarifies that investment made from foreign currency cannot be clubbed with Indian Rupee sourced funds.

Q163 MCQ · 1 mark EasyCharacteristics of Dematerialised Securities

What does it mean for dematerialised securities to be 'fungible'?

AThey can be converted back to physical form at any time.

✓They do not have a distinctive identity in terms of share certificate number or folio numbers.

CThey are traded exclusively on international stock exchanges.

DThey are always issued with a fixed maturity period.

Q164 MCQ · 1 mark EasyDematerialisation Regulations

What is the minimum public issue size that SEBI Regulations require to be issued only in dematerialised form?

ARs. 1 crore

BRs. 5 crores

✓Rs. 10 crores

DRs. 50 crores

💡 The text states, 'SEBI Regulations requires all public issues whose size is in excess of Rs. 10 crores to be issued only in dematerialised form.'

Q165 MCQ · 1 mark MediumNRI Investment Repatriation

An NRI investor makes an investment in India using funds sourced from Indian Rupees earned within India. Based on the text, what will be the repatriation status of the proceeds from the sale or redemption of these units?

AFreely repatriable, as all NRI investments are repatriable.

✓Non-repatriable, as the source of funds is Indian Rupees.

CRepatriable, but only after obtaining special permission from the RBI.

DPartially repatriable, depending on the investment amount.

💡 The text states, 'If the source of funds is Indian Rupees, it is non-repatriable.' It further explains why: 'The reason for the rupee investment proceeds being non-repatriable is that since the rupee is not fully convertible on capital account, RBI norms do not permit investment in Indian rupees to be freely converted to other world currencies and to be taken out in foreign currency.'

Q166 MCQ · 1 mark HardDematerialisation Process

An investor submits a Dematerialisation Request Form (DRF) along with physical share certificates to their Depository Participant (DP). Which of the following, if found by the R&T agent, would be a valid reason for *rejecting* the dematerialisation request?

AThe physical certificates have the words 'Surrendered for Dematerialisation' mutilated on them.

BThe Dematerialisation Request Number (DRN) in the physical documents matches the electronic request.

✓The securities do not pertain to the issuer/R&T agent.

DThe DP's authorization is present on the DRF.

💡 The chapter lists 'The Securities do not pertain to the issuer/R&T agent' as a reason for a dematerialisation request to be rejected. Options A, B, and D are conditions or steps that are part of a successful dematerialisation process or verification.

Q167 MCQ · 1 mark EasyDepositories in India

How many depositories are currently operational in India, as mentioned in the text?

AOne

✓Two

CThree

DFour

💡 The text states: 'There are currently two depositories operational in India, National Securities Depository Ltd. (NSDL) & Central Depository Services (I) Ltd. (CDSL).'

Q168 MCQ · 1 mark MediumRematerialisation Process

During the rematerialisation process, what action does the Registrar and Transfer (R&T) agent take regarding the Register of Members (RoM) of the company?

AThe R&T agent removes the beneficial owner's name and includes the depository's name.

BThe R&T agent assigns a new ISIN to the rematerialised securities.

✓The names of the beneficial owners are included in the RoM, and the depository's name is removed to that extent.

DThe R&T agent ensures that no revenue stamps are affixed, as rematerialisation is exempt from such duties.

💡 The text states: 'The names of the beneficial owners will be included in the Register of members of the company and the name of the depository removed to that extent.'

Q169 MCQ · 1 mark EasyPower of Attorney

Which of the following actions is a Power of Attorney (PoA) holder explicitly NOT allowed to perform on behalf of the grantor, as per the provided text?

APurchase securities.

BSettle transactions.

✓Appoint a nominee for the investment.

DMake initial investments in mutual funds.

💡 The text states, 'However, the attorney cannot appoint a nominee for the investment' and 'A PoA holder cannot make or change nominations in an account or investment.' Other options are explicitly or implicitly allowed.

Q170 MCQ · 1 mark MediumDematerialisation Process

In the process of dematerialisation, what action does the R&T agent take with the physical certificates once the dematerialisation request is processed and approved?

AThey are returned to the investor for record-keeping.

BThey are sent to SEBI for final approval.

✓They are mutilated and have the words ‘Surrendered for Dematerialisation” on them.

DThey are stored indefinitely without any physical alteration.

💡 The text states, 'The certificates received by the R&T agent will be mutilated and have the words ‘Surrendered for Dematerialisation” on it.' and further confirms, 'The R&T agent mutilates the physical certificates once the process of dematerialisation is complete.'

Q171 MCQ · 1 mark HardNRI Investment Repatriation

An NRI makes an investment in India using funds sourced from Indian Rupees earned in India. What is the repatriation status of the proceeds from the sale or redemption of this investment?

AFreely repatriable, as all NRI investments are repatriable.

✓Non-repatriable, because the rupee is not fully convertible on capital account.

CPartially repatriable, depending on the RBI's discretion.

DRepatriable, but only after a lock-in period of 5 years.

💡 The text clearly states, 'If the source of funds is Indian Rupees, it is non-repatriable.' and explains that 'the rupee is not fully convertible on capital account, RBI norms do not permit investment in Indian rupees to be freely converted to other world currencies and to be taken out in foreign currency.'

Q172 MCQ · 1 mark MediumDematerialisation Process

During the dematerialisation process, what action does the R&T agent take with the physical certificates once they are received from the DP?

AThey are immediately returned to the investor after verification.

BThey are stored securely in physical form by the R&T agent.

✓They are mutilated and have the words ‘Surrendered for Dematerialisation” on them.

DThey are sent directly to the depository for final processing.

💡 The text states, 'The certificates received by the R&T agent will be mutilated and have the words ‘Surrendered for Dematerialisation” on it.'

Q173 MCQ · 1 mark HardRematerialisation Process

During the rematerialisation process, what is the R&T agent required to do regarding revenue stamps?

✓Ensure that the applicable revenue stamps are affixed to the newly printed certificates.

BCollect revenue stamps from the investor before processing the request.

CWaive the requirement for revenue stamps, as it is a conversion process.

DVerify that the original dematerialisation request included revenue stamps.

💡 The text states: 'The R&T agent shall ensure that the applicable revenue stamps are affixed.'

Q174 MCQ · 1 mark EasyDematerialisation

Which of the following statements is TRUE regarding depositories in India?

AThere is only one depository operational in India, NSDL.

BDepositories hold investors' securities in physical form.

✓SEBI Regulations require all public issues whose size is in excess of Rs. 10 crores to be issued only in dematerialised form.

DInvestors in mutual funds are mandated to convert their holdings into demat mode.

💡 The text states, 'There are currently two depositories operational in India, National Securities Depository Ltd. (NSDL) & Central Depository Services (I) Ltd. (CDSL),' making A false. It also states that a depository 'offers the service of holding the securities of the investors in electronic form,' making B false. For mutual funds, investors 'are free to hold them in physical form,' making D false. The text explicitly states, 'SEBI Regulations requires all public issues whose size is in excess of Rs. 10 crores to be issued only in dematerialised form,' confirming C as true.

Q175 MCQ · 1 mark EasyDepositories Act

The Depositories Act, which allows companies and investors to issue, hold, and transact in securities through a depository, was passed in which year?

A1992

✓1996

C2000

D2005

💡 The text states, 'The Depositories Act was passed in 1996 which allow companies and investors to issue, hold and transact in securities through a depository.'

Case-Based Questions (5 sets)

Case 1 Case-Based · 1 mark each Operational Aspects of Investment Management (Dematerialisation, PoA, NRI Accounts)

Mr. Rajiv Sharma, a 45-year-old Person of Indian Origin (PIO), resides in the USA. He recently inherited a portfolio of Indian shares from his late father, which are still held in physical certificate form. Mr. Sharma wishes to convert these physical shares into electronic form to facilitate easier trading and management. He also plans to make fresh investments in Indian mutual funds. Due to his frequent travel and residency abroad, Mr. Sharma wants to grant a Power of Attorney (PoA) to his younger sister, Ms. Priya Sharma, who lives in Mumbai. He intends for Ms. Priya to manage his investment transactions, including buying and selling securities, and handling other operational aspects on his behalf. Mr. Sharma is particularly keen to understand the process of dematerialisation and the scope and limitations of a PoA, especially concerning new account openings and fund repatriation. He holds an NRE (Non-Resident External) account in India, which he uses for his foreign currency remittances, and also has an NRO (Non-Resident Ordinary) account where he deposits income earned in India, such as rent from a property.

Medium Sub-question 1

Mr. Sharma has granted a General Power of Attorney to Ms. Priya Sharma. Which of the following actions can Ms. Priya NOT perform on Mr. Sharma's behalf using this PoA?

APurchase and sell mutual fund units.

BSettle investment transactions and make payments.

✓Open a new demat account for Mr. Sharma.

DManage real estate and other property.

💡 The chapter explicitly states, 'A PoA holder cannot open or close a bank or a demat account. The signatures of the holders of the account are necessary for this.' Other actions like purchasing/selling, settling transactions, and managing property are typically covered under a General PoA.

Medium Sub-question 2

Mr. Sharma initiates the dematerialisation process for his inherited physical shares. Which of the following is a mandatory step in this process?

AThe investor must personally visit the depository to submit the physical certificates.

BThe Dematerialisation Request Form (DRF) must be submitted to the Issuer/R&T agent directly.

✓The physical certificates along with the DRF must be handed over to a Depository Participant (DP).

DThe R&T agent issues new physical certificates after verification.

💡 The steps for dematerialisation clearly state: 'Investor hands over the securities to be dematerialised along with the Dematerialisation Request Form (DRF) to the DP.' The DP then forwards the request electronically and physically to the R&T agent and depository.

Easy Sub-question 3

What is the primary role of a depository in the context of Mr. Sharma's physical share certificates?

ATo provide financial advice on investment strategies.

✓To hold securities of investors in electronic form.

CTo act as a registrar and transfer agent for companies.

DTo regulate the stock market operations in India.

💡 As per the chapter, a depository is an institution that offers the service of holding the securities of the investors in electronic form, comparable to a bank holding funds. This is essential for Mr. Sharma to convert his physical shares.

Easy Sub-question 4

Mr. Sharma wants to convert his physical share certificates into electronic form. What is this process officially known as?

ARematerialisation

BRepatriation

✓Dematerialisation

DConsolidation

💡 The chapter defines dematerialisation as the process of converting physical securities into electronic form. This is the exact process Mr. Sharma needs to undertake for his inherited shares.

Hard Sub-question 5

Mr. Sharma plans to invest in new mutual funds using funds from his NRE account. If he later redeems these mutual fund units, what will be the repatriation status of the proceeds?

AThe proceeds will be fully non-repatriable, as all rupee investments are non-repatriable.

✓The proceeds will be freely repatriable, as the source of funds was foreign currency.

CThe proceeds can only be repatriated up to a certain annual limit set by RBI.

DThe repatriation status will depend on the duration of his investment.

💡 The chapter states: 'If the source of funds for an NRI investment is foreign currency, it can be freely taken outside the country; that is, it is repatriable.' An NRE account is used for foreign currency remittances, meaning investments made from it are considered to have a foreign currency source, making the proceeds freely repatriable.

Case 2 Case-Based · 1 mark each Operational Aspects of Investment Management

Mr. Rajeev Mehta, a 45-year-old Indian citizen, has been working and residing in the USA for the past 10 years. He visits India once a year for about 45 days to meet his family. Recently, he inherited a portfolio of Indian investments from his late father, which includes several physical share certificates of an old, listed Indian company and some mutual fund units held in statement of account form. Rajeev also holds an NRE bank account in India. He wishes to streamline these holdings, convert them to electronic form, and potentially grant a Power of Attorney (PoA) to his sister, Ms. Priya Sharma, who resides in Mumbai, to manage his Indian investment affairs more efficiently. He is particularly concerned about the legalities, documentation, and operational aspects involved in these processes. Rajeev's father had acquired the physical shares before the Dematerialisation Act came into effect, and they have been lying in physical form since. The mutual fund units were purchased over the years and are currently held as 'Statement of Account' rather than in a demat account. Rajeev wants to understand if all these securities can be dematerialised and what steps are involved. He also wants to know the scope and limitations of a PoA, especially since he cannot be physically present for all transactions. He is also keen to ensure that any investment proceeds from his NRE account remain repatriable.

Easy Sub-question 1

Based on the provided chapter text, which of the following statements is TRUE regarding the dematerialisation of Mr. Rajeev Mehta's inherited physical share certificates and mutual fund units?

AOnly the physical share certificates can be dematerialised, not the mutual fund units.

✓Both the physical share certificates and the mutual fund units are eligible for dematerialisation.

CNeither the physical share certificates nor the mutual fund units can be dematerialised as they are inherited.

DMutual fund units can only be held in physical 'Statement of Account' form and cannot be dematerialised.

💡 The chapter explicitly states that 'Shares, scrips, stocks...' and 'Units of a mutual fund...' are categories of securities eligible for dematerialisation. It also mentions that 'Investors in mutual funds can either ask for a demat issuance of units, or convert their holdings into demat mode.' This confirms both types of securities are eligible for dematerialisation.

Hard Sub-question 2

Considering Mr. Rajeev Mehta's situation as an NRI residing in the USA, what specific requirements must be met for the Power of Attorney (PoA) granted to Ms. Priya Sharma to be valid in India, especially if executed abroad?

AIt must be typed on a non-judicial stamp paper, signed by Rajeev on all pages, and notarised in the USA.

✓It can be typed on a plain paper, attested by a designated official of the Indian embassy abroad, signed by Rajeev on all pages, and then signed by Priya, stamped and notarised in India.

CIt must be executed only in India, signed by both Rajeev and Priya in front of a notary public.

DRajeev must be physically present in India to sign the PoA on a non-judicial stamp paper, and it must be notarised.

💡 The chapter states: 'If the Power of Attorney is executed abroad, it can be typed on a plain paper, attested by a designated official of the Indian embassy abroad or by a notary abroad, signed on all pages by the grantor and sent to India for the holder of the power of attorney to sign on the last page. It is then stamped and notarized in India, if required.' Option B accurately reflects these combined requirements.

Medium Sub-question 3

Mr. Rajeev Mehta ensures that all his new investments in India are made from funds transferred from his NRE (Non-Resident External) bank account, which holds foreign currency. Based on the chapter, what is the implication for the proceeds from these investments, and how does Rajeev's residential status align with the Income Tax Act?

AThe investment proceeds will be non-repatriable, and Rajeev is considered a resident as he visits India annually.

✓The investment proceeds will be repatriable, and Rajeev is considered a non-resident because his visit duration is less than 60 days in the previous year, with the exception for visitors.

CThe investment proceeds will be non-repatriable, and Rajeev is considered a non-resident because he resides abroad for more than 182 days.

DThe investment proceeds will be repatriable, but Rajeev is considered a resident because he has been in India for more than 365 days in the preceding four years.

💡 1. Repatriation: The chapter states, 'If the source of funds for an NRI investment is foreign currency, it can be freely taken outside the country; that is, it is repatriable.' Funds from an NRE account are foreign currency sourced, hence repatriable. 2. NRI Status (Income Tax Act): An individual is resident if: (1) 182+ days in the previous year OR (2) 60+ days in the previous year AND 365+ days in 4 preceding years. Rajeev visits India for 45 days, which is less than 182 days. Crucially, the chapter mentions an exception for condition 2: 'However, condition No. 2 (mentioned above) does not apply where an individual being citizen of India or a person of Indian origin, who being outside India, comes on a visit to India during the previous year.' Since Rajeev is an Indian citizen visiting India for less than 60 days, condition 2 does not apply to him. Therefore, he does not meet the criteria for being a resident and is considered a non-resident.

Easy Sub-question 4

Mr. Rajeev Mehta plans to grant a Power of Attorney (PoA) to his sister, Ms. Priya Sharma, to manage his investment affairs. Which of the following actions CANNOT be performed by Ms. Priya Sharma as a PoA holder?

APurchase and sell securities on behalf of Rajeev.

BMake initial and subsequent investments in mutual funds.

✓Appoint a nominee for Rajeev's investments.

DSettle transactions and redeem investments.

💡 The chapter explicitly states under the 'Power of Attorney' section: 'However, the attorney cannot appoint a nominee for the investment.' It further clarifies: 'A PoA holder cannot make or change nominations in an account or investment.' The other options are permissible actions for a PoA holder.

Medium Sub-question 5

Mr. Rajeev Mehta proceeds to dematerialise his physical share certificates. Which of the following is the correct sequence of actions for the initial steps involving the investor and Depository Participant (DP)?

AInvestor submits Dematerialisation Request Form (DRF) to R&T agent -> R&T agent sends request to DP.

✓Investor hands over physical securities and DRF to DP -> DP sends request electronically to issuer/R&T agent and depository.

CDP verifies physical securities -> Investor submits DRF to DP.

DIssuer/R&T agent mutilates certificates -> Investor receives DRN from DP.

💡 The chapter outlines the steps in dematerialisation as: 'Investor hands over the securities to be dematerialised along with the Dematerialisation Request Form (DRF) to the DP. The DP sends the request through the electronic system to the issuer/R&T agent and the depository.'

Case 3 Case-Based · 1 mark each Operational Aspects of Investment Management

Mr. Rajiv Sharma, a 45-year-old Indian citizen, has been residing and working in Dubai for the past 10 years. He visits India annually for approximately 45 days to spend time with his family. Recently, he inherited some physical share certificates of 'BrightFuture Ltd.' from his late grandfather, which were issued in 1995. He also holds units of an Indian mutual fund, for which he has received Statement of Accounts. Mr. Sharma wishes to convert all his physical holdings into electronic form for easier management. Furthermore, he wants to appoint his sister, Ms. Priya Sharma, to manage his Indian financial transactions, including buying and selling securities, making payments, and settling transactions, as he is often unavailable due to his work commitments abroad. He approaches an Investment Adviser for comprehensive guidance on these operational aspects, including his residential status, dematerialisation process, Power of Attorney requirements, and implications for future investments.

Easy Sub-question 1

Based on the information provided, what would be Mr. Rajiv Sharma's residential status for income tax purposes in India for the current financial year?

AResident

✓Non-Resident Indian (NRI)

CResident but Not Ordinarily Resident (RNOR)

DOverseas Citizen of India (OCI)

💡 As per Section 6 of the Income-tax Act, an individual is deemed to be resident in India if they are in India for a period of 182 days or more during the previous year, or if they are in India for a period of 60 days or more during the previous year AND 365 days or more during 4 years immediately preceding the previous year. However, for an Indian citizen or a person of Indian origin who is outside India and comes on a visit, the second condition (60 days) does not apply. Since Mr. Sharma is an Indian citizen visiting India for only 45 days, which is less than 182 days, he does not meet the criteria to be a resident. Therefore, he is a Non-Resident Indian (NRI).

Hard Sub-question 2

Mr. Sharma decides to make a fresh investment of INR 5,00,000 in an Indian equity mutual fund. If he intends to repatriate the investment proceeds (capital and gains) back to Dubai at a later date, what crucial factor must he consider regarding the source of these funds?

✓The funds must originate from a NRE (Non-Resident External) account or foreign currency remittance to ensure repatriability.

BAny funds, whether from NRO (Non-Resident Ordinary) account or NRE account, are freely repatriable as per current RBI guidelines for NRIs.

CThe investment must be made from funds earned specifically in India to be eligible for repatriation.

DRepatriation is only possible if the investment amount exceeds a certain threshold set by SEBI.

💡 The chapter clearly states that if the source of funds for an NRI investment is foreign currency, it can be freely taken outside the country (repatriable). If the source of funds is Indian Rupees, it is non-repatriable. Funds in NRE (Non-Resident External) accounts are considered freely repatriable as they originate from foreign earnings, whereas funds in NRO (Non-Resident Ordinary) accounts, which include Indian-sourced income, are generally non-repatriable for capital account transactions. Therefore, to ensure repatriation of investment proceeds, the investment must be made from repatriable funds, typically from an NRE account or direct foreign currency remittance.

Medium Sub-question 3

During the dematerialisation process for Mr. Sharma's inherited shares, which of the following would NOT be a valid reason for the R&T agent to reject his Dematerialisation Request Form (DRF)?

AThe physical certificates have a mismatch in information compared to the DRF.

BThe signature of Mr. Sharma on the DRF does not tally with the records of the R&T agent.

✓The securities are units of a mutual fund held in Statement of Accounts.

DThe inherited shares are in his grandfather's name, while the demat account is in Mr. Sharma's name.

💡 Valid reasons for rejection of a dematerialisation request include mismatch in information between the DRF and physical certificates, fake/stolen certificates, securities standing in a different name(s) from that mentioned in the DRF, and signature mismatch. The fact that mutual fund units can be held in physical form via Statement of Accounts is a characteristic of mutual fund holdings, not a reason to reject a dematerialisation request, especially for shares of 'BrightFuture Ltd.' which are distinct from mutual fund units. Even if it were a request to dematerialise mutual fund units, holding them via Statement of Accounts is a valid form and not a rejection reason.

Medium Sub-question 4

Mr. Sharma wishes to grant a Power of Attorney (PoA) to his sister, Ms. Priya Sharma, from Dubai. Which of the following combinations of requirements is essential for the PoA to be considered valid for financial transactions in India?

✓Typed on plain paper, attested by a designated official of the Indian embassy abroad, signed by grantor on all pages, signed by holder on last page, and notarized in India if required.

BTyped on non-judicial stamp paper, signed by grantor on all pages, signed by holder on last page, and notarized in Dubai.

CTyped on plain paper, signed by grantor only, and submitted directly to the investment adviser.

DTyped on non-judicial stamp paper, attested by a notary abroad, signed by grantor and holder on all pages, and no further notarization required.

💡 As per the chapter, if a Power of Attorney is executed abroad, it can be typed on a plain paper, attested by a designated official of the Indian embassy abroad or by a notary abroad, signed on all pages by the grantor and sent to India for the holder of the power of attorney to sign on the last page. It is then stamped and notarized in India, if required. Option A accurately describes this process.

Easy Sub-question 5

What is the initial step Mr. Sharma needs to take to convert his inherited physical share certificates of 'BrightFuture Ltd.' into electronic (dematerialised) form?

ADirectly send the certificates to the Depository (NSDL/CDSL).

✓Submit the physical certificates along with a Dematerialisation Request Form (DRF) to his Depository Participant (DP).

CSend the certificates to the Registrar and Transfer (R&T) agent of BrightFuture Ltd.

DContact SEBI for approval to convert physical shares.

💡 The process of dematerialisation begins with the investor handing over the physical securities to be dematerialised along with the Dematerialisation Request Form (DRF) to their Depository Participant (DP). The DP then sends the request through the electronic system to the issuer/R&T agent and the depository.

Case 4 Case-Based · 1 mark each Operational Aspects of Investment Management

Mr. Rajiv Sharma, a 55-year-old Indian citizen, has been residing in the USA for the past 20 years, working as a software engineer. He visits India annually for about 45 days to meet his family. Recently, he decided to consolidate his Indian investments and manage them more efficiently. He holds some old physical share certificates of XYZ Ltd. (issued in 1998, face value Rs. 10 each) and also wants to invest in a new public issue of ABC Corp. Ltd. which is expected to be over Rs. 15 crores. Due to his frequent international travel and busy schedule, Mr. Sharma wishes to appoint his younger brother, Mr. Alok Sharma, who lives in Mumbai, to handle his investment transactions in India. Mr. Alok Sharma is 48 years old and has a good understanding of the Indian financial markets. Mr. Rajiv Sharma also has some savings in an NRO account from rental income in India, which he wishes to invest, alongside funds he plans to remit from his foreign currency earnings in the USA. He is particularly interested in ensuring the investment proceeds from his foreign remittances are easily repatriable.

Medium Sub-question 1

Mr. Rajiv Sharma grants a Power of Attorney (PoA) to his brother, Mr. Alok Sharma, to manage his investments. Which of the following actions can Mr. Alok Sharma, as the PoA holder, *NOT* undertake on behalf of Mr. Rajiv Sharma?

APurchase mutual fund units and make payments for them.

BSell existing shares and settle transactions.

✓Open a new demat account for Mr. Rajiv Sharma.

DRedeem investment units and receive proceeds.

💡 The chapter explicitly states that 'A PoA holder cannot open or close a bank or a demat account. The signatures of the holders of the account are necessary for this.' Other actions like purchasing, selling, and redeeming investments are generally permissible for a PoA holder, depending on the scope of the PoA.

Hard Sub-question 2

Mr. Rajiv Sharma wants to dematerialise his old physical share certificates of XYZ Ltd. Describe the correct sequence of key steps involved in this process, highlighting the interaction between the investor, DP, and R&T agent.

✓Investor submits DRF and physical certificates to DP → DP sends electronic request to R&T agent and depository, and physical documents to R&T agent → R&T agent verifies and mutilates certificates, updates Register of Members, confirms to depository → Investor's demat account is credited.

BInvestor sends physical certificates directly to the R&T agent → R&T agent verifies and credits investor's demat account → Investor informs DP to update records.

CInvestor submits DRF to DP → DP sends electronic request to depository → Depository directly converts to electronic form and informs investor.

DR&T agent contacts investor to collect physical certificates → R&T agent dematerialises them → Investor then opens a demat account.

💡 The correct sequence for dematerialisation as per the chapter is: 1. Investor hands over the securities to be dematerialised along with the Dematerialisation Request Form (DRF) to the DP. 2. The DP sends the request through the electronic system to the issuer/R&T agent and the depository. The Dematerialisation Request Number (DRN) is entered on the DRF and sent along with the physical documents and a standard covering letter to the R&T agent. 3. The R&T agent verifies the documents, mutilates the physical certificates, updates the Register of Members (RoM) of the company (depository's name included). 4. Confirmation is sent to the depository and the investor’s account with the DP is credited with the number of dematerialised shares.

Medium Sub-question 3

Mr. Rajiv Sharma plans to invest funds from two sources: rental income from his NRO account (Indian Rupees) and remittances from his foreign currency earnings in the USA. Regarding the repatriation of investment proceeds, which statement is accurate?

AProceeds from both sources will be freely repatriable as long as they are invested in the same portfolio.

BProceeds from the NRO account investment will be repatriable, while foreign currency remittances will be non-repatriable.

✓Proceeds from the foreign currency remittances will be repatriable, while NRO account investment proceeds will be non-repatriable.

DRepatriation depends on the type of security invested in, not the source of funds.

💡 The chapter clarifies that 'If the source of funds for an NRI investment is foreign currency, it can be freely taken outside the country; that is, it is repatriable. If the source of funds is Indian Rupees, it is non-repatriable.' It also states that investment made from these two sources of income cannot be clubbed together for repatriation purposes.

Easy Sub-question 4

Based on the provided details, what is Mr. Rajiv Sharma's residential status as per the Income Tax Act for the current financial year?

AResident and Ordinarily Resident (ROR)

BResident but Not Ordinarily Resident (RNOR)

✓Non-Resident Indian (NRI)

DDeemed Resident

💡 Mr. Rajiv Sharma is an Indian citizen, living outside India, and visits India for only 45 days annually. As per Section 6 of the Income Tax Act, for an Indian citizen or a Person of Indian Origin (PIO) visiting India, the condition of being in India for 60 days or more is not applicable. To be a resident, he would need to be in India for 182 days or more. Since he is in India for only 45 days, he does not meet the criteria for being a resident and is thus a Non-Resident Indian (NRI).

Easy Sub-question 5

Mr. Rajiv Sharma wants to invest in the upcoming public issue of ABC Corp. Ltd., which is expected to be over Rs. 15 crores. What form will the units of this public issue be issued in, as per SEBI regulations?

APhysical form only, with a physical certificate.

✓Dematerialised form only.

CEither physical or dematerialised form, as per investor's choice.

DInitially physical, then convertible to dematerialised form.

💡 According to SEBI Regulations mentioned in the chapter, all public issues whose size is in excess of Rs. 10 crores are required to be issued only in dematerialised form. Since ABC Corp. Ltd.'s public issue is expected to be over Rs. 15 crores, it must be issued in dematerialised form.

Case 5 Case-Based · 1 mark each Operational Aspects of Investment Management

Mr. Rajesh Kumar, a 48-year-old Indian citizen, has been living and working in Dubai for the past 10 years. He visits India annually for about 45-50 days. He holds a significant investment portfolio in India, which includes some ancestral shares of a listed company, acquired in physical certificate form in 1998, and also units of several mutual funds, some of which he holds in physical Statement of Account form. He wishes to streamline his holdings and enable easier management of his investments. Recently, Mr. Kumar decided to dematerialise his physical share certificates and also convert his mutual fund units into demat form. He approached a Depository Participant (DP) in India to initiate this process. Additionally, recognizing the challenges of managing investments from abroad, he is considering granting a Power of Attorney (PoA) to his younger sister, Ms. Priya Sharma, who resides in Mumbai, to handle his financial transactions in India. He wants to ensure that the PoA is legally valid and covers the necessary aspects of investment management, while also understanding the limitations of such an arrangement.

Easy Sub-question 1

What is the primary purpose of dematerialisation of securities, as Mr. Rajesh Kumar intends to do with his physical shares and mutual fund units, according to the provided chapter text?

✓To convert physical securities into electronic form for easier holding and transaction.

BTo eliminate the need for an International Securities Identification Number (ISIN).

CTo make securities non-fungible and unique to each investor.

DTo increase the stamp duty payable on security transfers.

💡 The chapter text explicitly states, "Dematerialisation is the process of converting physical securities into electronic form." This is the primary purpose Mr. Kumar would be undertaking.

Hard Sub-question 2

Mr. Kumar successfully dematerialised his physical shares. Subsequently, he plans to convert his mutual fund units into demat form. How would these dematerialised shares and mutual fund units be uniquely identified in the depository system, and what specific characteristic applies to these dematerialised holdings?

AThey are identified by their original physical certificate numbers and are considered non-fungible.

✓They are identified by their International Securities Identification Number (ISIN) and the number of shares/units held, and they are fungible.

CThey are identified by distinct folio numbers within the Register of Members and they retain unique identities.

DThey are identified by the Depository Participant (DP) ID and client account number, and they are non-fungible.

💡 The chapter states, 'In the depository, the dematerialised securities are identified in terms of the ISIN and the number of shares.' It also clarifies that 'The dematerialised securities are fungible. This means that once a share is dematerialised, it does not have a distinctive identity in terms of share certificate number or distinctive numbers or folio numbers.' This applies to both shares and mutual fund units, as mutual fund units are also eligible for dematerialisation.

Medium Sub-question 3

During the dematerialisation process of Mr. Kumar's physical share certificates, which entity is primarily responsible for verifying that the Dematerialisation Request Form (DRF) has the DP’s authorization and that the DRN in the physical documents matches the electronic request?

AThe Depository Participant (DP)

BThe Depository (NSDL or CDSL)

✓The Issuer or its Registrar and Share Transfer (R&T) agent

DThe Securities and Exchange Board of India (SEBI)

💡 The chapter text states under '17.3.1 Dematerialisation' that 'The R&T agent has to verify that: The DRF has the DP’s authorization' and 'The DRN in the physical documents matches with the DRN in the electronic request.' Thus, the Issuer or its R&T agent is responsible for these verifications.

Medium Sub-question 4

Based on the information provided about Mr. Rajesh Kumar's stay in India and the chapter text on non-resident status, what is his likely residential status for income tax purposes in India for the current financial year?

AResident and Ordinarily Resident

BResident but Not Ordinarily Resident

✓Non-Resident

DDeemed Resident

💡 As per Section 6 of the Income-tax Act, an individual is a resident if they are in India for 182 days or more during the previous year, OR for 60 days or more during the previous year AND 365 days or more during 4 preceding years. However, condition No. 2 (60+365 days) does not apply to an Indian citizen visiting India. Mr. Kumar is an Indian citizen visiting India for 45-50 days, which is less than 182 days. Since the second condition does not apply to him, he does not meet either criteria for being a resident and is therefore a Non-Resident.

Easy Sub-question 5

If Mr. Rajesh Kumar grants a Power of Attorney (PoA) to his sister, Ms. Priya Sharma, to manage his investments, which of the following actions is explicitly stated in the chapter text as NOT allowed for a PoA holder?

APurchasing new securities on behalf of the grantor.

BSettling transactions for the grantor.

✓Making or changing nominations for the investment.

DMaking initial investments in mutual funds.

💡 The chapter text clearly states, "However, the attorney cannot appoint a nominee for the investment." and "A PoA holder cannot make or change nominations in an account or investment." The other options are generally allowed for a PoA holder.

About this content: These practice questions are based on the NISM-Series-X-A: Investment Adviser (Level 1) Certification Examination Workbook published by the National Institute of Securities Markets (NISM), Mumbai. NISM is a SEBI-established institution. Questions cover Operational Aspects of Investment Management with verified answers and explanations. BullWiser is an independent exam preparation platform — not affiliated with NISM or SEBI. Last updated: July 08, 2026.

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Ch.17: Operational Aspects of Investment Management

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