Government Securities Bill tabled in Lok Sabha

By Our Economy Bureau | 22 Dec 2004

New Delhi: Finance minister, P Chidambaram, yesterday introduced the Government Securities Bill, 2004 in the Lok Sabha. The bill aims to make trading in government securities more customer-friendly by doing away with the various `rigidities and deficiencies'' in the Public Debt Act, 1944.

The bill also seeks to repeal the Indian Securities Act, 1920 and enables creation of pledge, hypothecation or lien in respect of government securities.

The Bill allows banks, which maintain a subsidiary general ledger (SGL) account with the Reserve Bank of India, to operate a constituent SGL on behalf an individual.

While the bank would be deemed to be the holder of such account, the constituent would, however, be a beneficial owner, who "shall be entitled to claim from the holder all the benefits and be subjected to all the liabilities in respect of government securities held in the constituent SGL account."

It also provides for suspension of the holders of SGL account from trading with the facility of that account in the event of misuse, holding of government promissory notes (including treasury bills) by trusts and empower the RBI to call for information, cause inspection, issue directions and make regulations.