Why is 'Purchases are blocked as CDSL doesn't allow credit' error displayed?

This rejection message is displayed when buying P or ZP category stocks. These stocks are not listed on CDSL and cannot be delivered to the demat account. See list of P and ZP category stocks.

P-category stocks are restricted from buying due to their illiquidity, infrequent trading, and concerns related to depository matters and high taxation. All Zerodha (Depository participant) demat accounts are maintained with CDSL (Depository). Once the shares are bought, they are delivered to the demat account. If a security isn’t listed on CDSL, it isn’t possible for Zerodha to credit the shares in the demat account, hence buy orders are blocked.