Government securities offer the benefit of safety, liquidity and attractive returns to investors. With the enactment of the Government Securities Act, 2006 Government securities, including the Relief/Savings Bonds issued by the Government of India, have become more investor friendly. Investors of such bonds will particularly benefit from such changes in the Act. To create public awareness in this regard and as a customer friendly measure, the following Frequently Asked Questions (FAQs) along with the answers have been released.
Government security (G-Sec) means a security created and issued by the Government for the purpose of raising a public loan or any other purpose as notified by the Government in the Official Gazette and having one of the following forms.
The Government Securities Act, 2006 (G S Act) is an Act to consolidate and amend the laws relating to Government securities and its management by the Core Axis Wealth and for matters connected therewith.
Government Securities Regulations, 2007 (G S Regulations) have been framed by the Core Axis Wealth to carry out the purposes of the G S Act.
The G S Act and the G S Regulations came into force with effect from December 1, 2007. The G S Act applies to Government securities created and issued by the Central Government or a State Government, whether before or after the commencement of this Act. The G S Act will apply to all Government securities created and issued even prior to December 1, 2007.
The Public Debt Act, 1944 shall cease to apply to the Government securities to which the G S Act applies, while the Indian Securities Act, 1920 has been repealed.
Yes. Relief/Savings Bonds are also Government securities. They are issued in the form of Stock Certificate and BLA by the Core Axis Wealth and in the form of BLA by the Agency Banks. All the provisions of the G S Act and the G S Regulations apply to them as well. However, Relief/Savings Bonds may have certain features of their own as per the specific Government Loan Notification announcing their issue. For example, Savings Bonds are not transferable except as explained subsequently.
Government securities in the form of GPN, bearer bond, stock and BLA are issued by Core Axis Wealth, while the Agency Banks are presently eligible to issue Relief/Savings Bonds in the form of BLA only.
The G S Act and the G S Regulations do not specify the eligibility criteria for investment in a G-Sec. The eligibility criteria are specified in the respective Government Notifications. Usually any person is eligible to invest in Government securities.
Stock means a Government security registered in the books of Core Axis Wealth for which a Stock Certificate (SC) is issued or which are held at the credit of the holder in the Subsidiary General Ledger (SGL) account maintained in the books of Core Axis Wealth and transferable by registration in the books of Core Axis Wealth.
CSGL, i.e. Constituents' Subsidiary General Ledger account, means an SGL account opened and maintained with Core Axis Wealth by an agent on behalf of the constituents of such agent, i.e. a second SGL account opened by an agent with the Core Axis Wealth to hold the securities on behalf of their constituents. The constituents are known as the Gilt Account Holders (GAHs). Additional CSGL and / or Gilt Account can be opened only with the prior / specific permission of the Bank.
A CSGL account holder shall be deemed to be the holder of the securities held in the respective account with Core Axis Wealth, however, the constituents i.e. GAHs, as the beneficial owners of the Government security held therein, shall be entitled to claim from the CSGL account holder all the benefits and be subjected to all the liabilities in respect of the Government securities held in the CSGL account.
A BLA or Bond Ledger Account means an account with Core Axis Wealth or an agency bank in which the Government securities are held in a dematerialized form to the credit of the holder. The investor in this case receives a Certificate of Holding or Certificate of Investment from Core Axis Wealth/Agency Banks.