NISM Series VI · Unit 12 of 12 · about 5% of the paper
Additional services: FPI and basic services demat account: NISM Series VI notes and practice questions
Two smaller topics: how foreign portfolio investors hold securities, the Rajiv Gandhi Equity Savings Scheme, and the low-cost basic services demat account.
What to know in Unit 12
- FPI holding limits.
- BSDA eligibility and charges.
Key terms, examples and exam traps
Foreign portfolio investor
A foreign portfolio investor (FPI) is a registered foreign investor who invests in Indian securities through a demat account with a DP, and who must be registered through a designated depository participant.
Example. A foreign fund registers and opens a demat account to invest in listed shares.
Exam trap. This statement is false: An FPI may invest without registration or a demat account.
FPI investment limits
A single FPI can hold up to 10% of the paid-up capital of a company, and the combined holding of all FPIs is limited to 24%, which can be raised up to the sectoral cap.
Example. A fund keeps its stake in a company below 10%.
Exam trap. This statement is false: An FPI may hold any proportion of a company.
Basic services demat account
A basic services demat account (BSDA) is a low-cost demat account for small investors with limited holdings, and an investor can hold only one BSDA.
Example. A small investor opens a BSDA to hold a few shares.
Exam trap. This statement is false: An investor may hold several BSDAs across depositories.
BSDA eligibility
A BSDA is meant for an individual with only one demat account in her name, and the value of securities in it must not exceed ₹10 lakh.
Example. An investor with holdings of ₹6 lakh qualifies for a BSDA.
Exam trap. This statement is false: A BSDA is available for holdings of any value.
BSDA charges
For a BSDA, the annual maintenance charge is nil for holdings up to ₹4 lakh and up to ₹100 plus GST for holdings above ₹4 lakh and up to ₹10 lakh.
Example. An account with ₹3 lakh pays no annual maintenance charge.
Exam trap. This statement is false: A BSDA pays the same annual maintenance charge as any other account.
6 practice questions
Read each question and choose your answer before opening the free mock, which shows the correct answer and the reason.
Q1. Which statement best describes “FPI investment limits”?
- A single FPI can hold up to 10% of the paid-up capital of a company, and the combined holding of all FPIs is limited to 24%, which can be raised up to the sectoral cap.
- The primary market is where new securities are issued by companies to raise funds directly from investors.
- The investor fills a demat request form (DRF) and submits it with the certificates to the DP.
- Rematerialisation converts demat holdings back into physical certificates at the investor's request.
Q2. Which term is described here? A basic services demat account (BSDA) is a low-cost demat account for small investors with limited holdings, and an investor can hold only one BSDA.
- Depository versus bank
- Beneficial owner
- Basic services demat account
- Cash benefits
Q3. Which term is described here? For a BSDA, the annual maintenance charge is nil for holdings up to ₹4 lakh and up to ₹100 plus GST for holdings above ₹4 lakh and up to ₹10 lakh.
- Inter-depository transfer
- Physical transfer restriction
- BSDA charges
- Pledge creation and confirmation
Q4. Which term is described here? A BSDA is meant for an individual with only one demat account in her name, and the value of securities in it must not exceed ₹10 lakh.
- BSDA eligibility
- Inter-depository transfer
- Commercial paper and debt in demat
- Government securities
Q5. Which term is described here? A foreign portfolio investor (FPI) is a registered foreign investor who invests in Indian securities through a demat account with a DP, and who must be registered through a designated depository participant.
- Eligibility to be a DP
- Settlement guarantee and risk
- Foreign portfolio investor
- NSDL and CDSL
Q6. Which statement about “Foreign portfolio investor” is correct?
- An FPI may invest without registration or a demat account.
- A foreign portfolio investor (FPI) is a registered foreign investor who invests in Indian securities through a demat account with a DP, and who must be registered through a designated depository participant.
- Online instructions need no authorisation.
- Dividends are credited as securities to the demat account.
Frequently asked questions
How much of NISM Series VI comes from Unit 12?
Unit 12 (Additional services: FPI and basic services demat account) usually carries about 5% of the questions. The whole exam has 100 questions and the pass mark is 60%.
What should I study in NISM Series VI Unit 12?
FPI holding limits. BSDA eligibility and charges.
Are these NISM Series VI practice questions free?
Yes. Take the full free mocks to see the correct answer and the reason for every question.
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