Invocation Request Form
Also written IRF · Invocation Request Form (IRF)
The form a pledgee submits to its DP to invoke a pledge after the pledgor defaults, moving the securities from the pledgor's pledged balance to the pledgee's free balance without the pledgor's confirmation.
In plain language
A pledge exists so that the lender can take the securities if the borrower fails to repay. Invocation is that moment, and the Invocation Request Form (IRF) is how the lender starts it.
The key feature of a pledge, as opposed to hypothecation, shows up here: the lender does not need the borrower's agreement. Once the pledgee's DP verifies the IRF, the securities move straight out of the pledgor's pledged balance into the pledgee's own account. The borrower's DP has no role in confirming it.
What the pledgee cannot skip is due process - the pledge agreement, the depository bye-laws and SEBI regulations - and, from 2026, the Pledge Request Form's undertaking to give the pledgor reasonable notice.
How it works
From Chapter 9 (sections 9.2.1, 9.2.6 and 9.2.7):
Starting point. If the pledgor fails to discharge obligations under the pledge agreement, or for any other reason, the pledgee may invoke the pledge and claim beneficial ownership after taking the necessary steps under the pledge agreement, depository bye-laws and SEBI regulations.
Process.
- The pledgee fills the IRF and gives it to its DP.
- The DP checks completeness and validity; if not in order, returns it for rectification; if in order, issues an acknowledgement.
- The DP compares the form with the details displayed against the pledge number.
- The DP enters (maker) the invocation details against the pledge instruction number and verifies (checker) them. Pledgor and pledgee DPs must each have at least two users for maker-checker.
- On verification, securities move from the pledgor's "pledged balance" to the pledgee's "free balance". No confirmation is needed in the pledgor DP's system.
Limits and consequences.
- Locked-in securities cannot be invoked before the lock-in release date; the invocation request cannot even be set up till then.
- Stamp duty on the resulting transfer is collected from the pledgee on the market value (Rule 5(7) of the 2019 Stamp Rules); consideration is obtained from the pledgee.
- Under SEBI's circular of February 5, 2026, the PRF carries undertakings: the pledgee gives reasonable notice and complies with Sections 176 and 177 of the Indian Contract Act, 1872. On invocation, the depository notifies both pledgor and pledgee that the pledgee has been recorded as beneficial owner under Regulation 79(8) of the DP Regulations.
- DPs keep IRFs for at least five years.
Hypothecation is different (NSDL only): the lender's invocation request needs the borrower's confirmation; if rejected, the securities stay as pledged balances in the borrower's account.
A worked example
Illustrative figures.
Sunita pledged 2,000 shares to Shree Credit for a Rs 10 lakh loan. The pledge was confirmed; her holding statement shows 2,000 as pledged balance. She defaults.
| Step | Action |
|---|---|
| 1 | Shree Credit gives Sunita reasonable notice, per its PRF undertaking and the Indian Contract Act |
| 2 | Shree Credit fills an IRF quoting the pledge number, and submits it with consideration details to its DP |
| 3 | Its DP checks the IRF against the details shown for that pledge number; one official enters (maker), another verifies (checker) |
| 4 | 2,000 shares move from Sunita's pledged balance to Shree Credit's free balance - Sunita's DP confirms nothing |
| 5 | Stamp duty is collected from Shree Credit on the shares' market value - say 2,000 x Rs 540 = Rs 10,80,000 |
| 6 | The depository notifies Sunita and Shree Credit that Shree Credit is now recorded as beneficial owner |
Variation 1: 500 of the 2,000 shares were locked-in until 30 November. Shree Credit cannot set up invocation for those 500 until the lock-in is released.
Variation 2: if this had been an NSDL hypothecation, step 4 would need Sunita's confirmation, and if she rejected it the shares would stay in her account.
Why NISM asks about it
Chapter 9 (Special Services - Pledge and Hypothecation, 10% weightage) covers invocation of pledge (section 9.2.6), invocation of hypothecation (9.2.7), the new undertakings and intimation (9.2.1), and the checklist on retaining PRF/URF/IRF copies (Box 9.1). The chapter's first review question - if the lender needs the borrower's concurrence to appropriate the securities, is it a pledge or hypothecation? - is exactly the difference invocation exposes. Chapter 8 and Chapter 9 together cover stamp duty on invocation.
Common exam traps
- Pledge invocation needs no confirmation from the pledgor or its DP. Hypothecation invocation does.
- Securities go from the pledgor's pledged balance to the pledgee's free balance.
- Locked-in securities cannot be invoked before lock-in release.
- Stamp duty on invocation: from the pledgee, on market value - not on the loan amount, not from the pledgor.
- Hypothecation is an NSDL term; invocation of hypothecation is not applicable in CDSL.
- Maker-checker applies: one user enters, another verifies.
- Pledges are not inter-depository - pledgor and pledgee must be in the same depository (they may use different DPs).
Check yourself
1.For how long must a DP maintain copies of Pledge Request Forms, Unpledge Request Forms and Invocation Request Forms?
- a)One year
- b)Three years
- c)A minimum period of 5 years
- d)Permanently, with no minimum prescribed
Show the answer
Answer: (c) A minimum period of 5 years
The DP shall maintain copies of all Pledge Request Forms (PRF), Unpledge Request Forms (URF) and Invocation Request Forms (IRF) for a minimum period of 5 years, or any such period informed by SEBI/NSDL/CDSL from time to time.
Note that it is a minimum — option D is wrong not because permanent retention would be improper, but because a period is prescribed.
This sits in the same checklist as three other DP duties worth memorising together: the instruction form must be submitted in duplicate, the pledgor DP and pledgee DP must each create at least two users to implement the maker-checker feature, and the request for confirmation of pledge must be given before the closure date mentioned in the instruction form — not applicable in the case of NSDL.
2.According to the DP's checklist for processing a pledge / hypothecation request, which of the following must the DP ensure?
- a)The instruction form is submitted in duplicate, and the pledgor DP and pledgee DP each create at least two users to implement the maker-checker feature
- b)The instruction form is submitted in triplicate, one copy going to SEBI
- c)A single user may enter and verify the request, provided the form is signed by all holders
- d)Pledge forms are kept for a minimum of 8 years
Show the answer
Answer: (a) The instruction form is submitted in duplicate, and the pledgor DP and pledgee DP each create at least two users to implement the maker-checker feature
Box 9.1 lists: "Ensure that the instruction form is submitted in duplicate" and "Pledgor DP and Pledgee DP each shall create at least two users to implement the Maker-checker feature. Ensure that all compulsory fields in the instruction form are entered."
- B is wrong: the form is in duplicate, and nothing goes to SEBI.
- C defeats the purpose of maker-checker. One user enters (maker) and another verifies (checker). The invocation procedure shows this too: the DP enters (maker) the invocation request details ... and verifies (checker) the details.
- D has the wrong period. The DP must maintain copies of all PRF, URF and IRF for a minimum period of 5 years or any such period that SEBI / NSDL / CDSL may inform.
The checklist also requires that, except in NSDL, the request for confirmation of pledge is given before the closure date mentioned in the instruction form.
Where this is taught
Free preparation for NISM Series VIRelated terms
- PledgeA charge created over demat securities in favour of a lender who may appropriate them unilaterally on default — created by book entry under section 12 of the Depositories Act, not by handing over anything.
- Consideration AmountThe value of an off-market transfer or pledge invocation captured in the depository system from the transferor's DIS, on which stamp duty is calculated and collected before the transfer executes.
- HypothecationA charge over demat securities where the lender needs the borrower's concurrence to appropriate them — the same book entries as a pledge, with one extra confirmation, and a term used only in NSDL.
- Pledge sequence numberThe unique number the DP system generates for each pledge or hypothecation request, identifying that transaction for confirmation, closure and invocation even when many pledges exist between the same parties.
- PledgeeThe lender in a pledge or hypothecation — the party who confirms the pledgor's request through its own DP, and who is recorded as beneficial owner of the securities only on invocation.
- PledgorThe borrower in a pledge or hypothecation — the beneficial owner who offers demat securities as collateral, initiates the transaction through its own DP, and keeps ownership and corporate benefits until default.
- Unpledge Request FormThe prescribed form on which a pledgor asks its DP to close a pledge and release the securities, which the DP must retain for at least five years along with the PRF and IRF.
- Pledge Request FormThe standardised form on which a pledgor initiates a pledge, carrying mandatory undertakings from both pledgor and pledgee to comply with the Indian Contract Act and give reasonable notice before invocation.
- Pledged balanceThe status a pledgor's securities show once the pledgee has confirmed the pledge — distinct from the pledgor's free balance, but still legally owned by the pledgor until invocation.