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Can dynamic sql be used inside the UDF or not? other wise is any way there to implement that?
Can sql procedure be called from inside the UDF, if yes from what version.
Provided the UDF is an external UDF (ie not LANGUAGE SQL) you shouldn't have any problems.
Unless, of course, the version of DB2 you are running doesn't support it - for example the unsupported DB2 UDB ULWO V7. But you omitted that piece of information.