How is redemption of a debt instrument handled in dematerialised form?
One way of handling of redemption in dematerialised form is through transfer of all balance under the instrument (i.e. ISIN) to a demat account opened by issuer for the purpose. Prior to the date of redemption, the issuer has to complete all formalities associated with redemption in physical form. On the day of redemption, a debit-credit action will be undertaken wherein all balances under the instrument will be transferred to say, an Issuer Redemption Account. Alternatively, on receipt of information regarding completion of statutory requirements for redemption, ISIN will be deactivated in NSDL.
