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Currently, SGL Account holders (banks, financial institutions, Primary Dealers. etc.) are provided the facility to maintain a second SGL account called Constituents' SGL Account in the books of the Reserve Bank of India to enable them to hold Government securities on behalf of their constituents. In the mid-term review of Monetary and Credit Policy for the year 2000-01, the Governor had announced that the Reserve Bank will frame a set of guidelines governing the maintenance of the Constituents' SGL accounts, with a view to encouraging investors to hold securities in scripless form and to ensuring that entities holding securities in custody, employ practices and procedures so that the constituents' securities are appropriately accounted for and kept safe. The detailed guidelines of RBI dated 01.11.2000 are as under: RBI Guidelines for CSGL Account With a view to facilitating entities having Subsidiary General Ledger (SGL) accounts with RBI acting as custodians on behalf of their constituents for holding Government securities in scripless form, Reserve Bank has been allowing SGL Accountholders to have a second (SGL) Account in the books of Public Debt Office called "Constituents' Subsidiary General Ledger (CSGL) Account". The beneficial ownership of the securities held in such CSGL Accounts vests with the constituent investors (hereinafter referred to as "Gilt Accountholders"(GAH). Such accounts [hereinafter called Gilt Accounts ] enable the investors to realise all the benefits of a dematerialised holding through their bankers without the hassles and risks associated with physical form. In order, however, to ensure that entities providing custodial services for their constituents employ appropriate accounting practices and safe keeping procedures in regard to constituents' securities, it is felt necessary to issue a set of guidelines to CSGL Accountholders, as detailed in the Annexure. 2. It may accordingly be noted that the facility to maintain CSGL accounts by any SGL Accountholder will be conditional upon strict adherence to the guidelines enclosed. The existing SGL Accountholders who are having CSGL accounts may, therefore, ensure that the guidelines contained herein including the agreement with GAH are complied with by them and they should furnish us a certificate from their auditors to this effect latest by December 2000. The SGL Accountholders not interested in continuing to maintain CSGL accounts may inform the RBI so that these accounts could be closed immediately. Where the compliance is not received by 30th December 2000, RBI would be constrained to close the CSGL accounts. 3. Any SGL Accountholder wishing to open a CSGL account should ensure that the guidelines are complied with and that the agreement entered into with GAH contains the required provisions as indicated in the guidelines. A certificate from a firm of Chartered Accountants to the effect that the form of the agreement is in conformity with the guidelines may be sent to RBI along with the request for opening a CSGL account. Guidelines for Constituents' Subsidiary General Ledger (CSGL) Account
The CSGL Accountholder shall open and maintain the accounts of GAH in accordance with the above guidelines. The agreement entered into with the GAH shall besides setting out the circumstances under which CSGL Accountholder will accept/release securities, accept/release monies (wherever applicable), receive rights/entitlements in the securities, etc., also incorporate the obligations of the CSGL Accountholder as indicated at II.2 to II.7 above. The CSGL's auditor should certify that the format of the agreement incorporates all the obligations of the CSGL Accountholder and a copy of the auditor's certificate may be sent to Public Debt Office (PDO) of RBI with which the CSGL accounts are held on or before 30th December 2000. Any changes in the format of the agreement should also be certified by the auditors, as and when made and the copy thereof, may be furnished to the PDO. CSGL Accountholder shall maintain the following records and documents, namely: -
Every CSGL Accountholder shall preserve the records and documents maintained under this paragraph for a minimum period of five years. RBI may, at any time, call for any information from a CSGL Accountholder with respect to any matter relating to its activity as custodian of securities. Where the Bank under item 1 above calls for any information, it shall be the duty of the CSGL Accountholder to furnish such information, within such reasonable period as the Bank may specify. CSGL Accountholder may submit a statement giving details of transactions effected between the Gilt Accountholders to the Chief General Manager, Internal Debt Management Cell, RBI every week. CSGL Accountholder may submit a statement showing the balances of Government securities held on behalf of each of the Gilt Accountholders to PDO on half-yearly basis as on 31st March and 30th September each year. The banks which are CSGL Accountholders, may continue to furnish copies of half-yearly review reports as on 31st March and 30th September each year on their own investments as also on behalf of other constituents including brokers to respective Regional Offices of Department of Banking Supervision. The banks which are CSGL Accountholders, may continue to furnish the copies of Concurrent Audit reports to the Regional Offices of Department of Banking Supervision. ENCLOSURE Eligibility for investment in Government Stock in terms of Government of India Notification F .No. 4(2) -W&M/97 dated 1st April 1997 Investments in the government Stock may be made by any person including firms, companies, corporate bodies, institutions, state governments, provident funds and trusts. Non-Resident Indians (NRIs, viz., Indian Citizen and Individuals of Indian origin). Overseas Corporate bodies predominantly owned by NRIs and Foreign Institutional Investors registered with SEBI and approved by Reserve Bank of India are also eligible to invest in the Government Stock. However, investment by a person resident outside India (whether a citizen of India or not), or a person who is not a citizen of India but is resident in India or a company which is not incorporated under any law in force in India or any branch of such company shall be subject to the provisions of the Exchange Control in addition to the other provisions of laws applicable to Government Stock as per terms as stipulated hereinafter. Eligibility for investment in Government of India Treasury Bills by auction in terms of Government of India Notification F .No. 2(12) -W&M/97 dated 31st March 1998 The Bills may be held by any person including firms, companies, corporate bodies, institutions, and trusts in India. State governments, eligible provident funds in India and the Nepal Rastra Bank can participate on 'non-competitive' basis in auctions for specified bills as decided by Banks from time to time. Eligible Provident Funds are those non-government provident funds governed by the Provident Fund Act, 1925 and Employees' Provident Fund and Miscellaneous Provision Act, 1952 whose investment pattern is decided by the Government of India. Non-Resident Indians (NRIs, viz., Indian Citizen and Individuals of Indian origin), Overseas Corporate bodies predominantly owned by NRIs are also eligible to invest in the Bills. However, investment by a person resident outside India (whether a citizen of India or not), or a person who is not a citizen of India but is resident in India or a company which is not incorporated under any law in force in India or any branch of such company shall be subject to the provisions of the Exchange Control in addition to the other provisions of laws applicable to Bills as per terms as stipulated hereinafter. |
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