Government Securities Act, 2006 comes into force from December 1st, 2007
December, 03rd 2007
The Government of India has notified December 1, 2007 as the appointed date on which the Government Securities Act, 2006 will come into force. Government Securities Regulations, 2007 will also come into effect from the same date, i.e., December 1, 2007.
It may be recalled that with a view to consolidating and amending the law relating to Government securities and its management by the Reserve Bank of India, the Parliament had enacted the Government Securities Act, 2006 (the Act). The Act received the assent of President of India on August 30, 2006 and was published in the Gazette of India, Extraordinary, Part II Section I on August 31, 2006 for general information.
The Act applies to Government securities created and issued, whether before or after the commencement of the Act, by the Central or a State Government. Accordingly, the Public Debt Act, 1944 will cease to apply to the Government securities. The Indian Securities Act, 1920 has been repealed.
The new Act and Regulations would facilitate widening and deepening of the Government securities market and its more effective regulation by the Reserve Bank in various ways, such as:
(i) Stripping or reconstitution of Government securities;
(ii) Legal recognition of beneficial ownership of the investors in Government securities through the Constituents' Subsidiary General Ledger (CSGL);
(iii) Statutory backing for the Reserve Bank's power to debar Subsidiary General Ledger (SGL) account holders from trading, either temporarily or permanently, for misuse of SGL account facility;
(iv) Facility of pledge or hypothecation or lien of Government securities for availing of loan;
(v) Extension of nomination facility to hold the securities or receive the amount thereof in the event of death of the holder;
(vi) Recognition of title to Government security of the deceased holder on the basis of documents other than succession certificate such as will executed by the deceased holder, registered deed of family settlement, gift deed, deed of partition, etc., as prescribed by the Reserve Bank of India.
(vii) Recognition of mother as the guardian of the minor for the purpose of holding Government Securities; and
(viii) Statutory powers to the Reserve Bank to call for information, cause inspection and issue directions in relation to Government securities.