An Act to consolidate and amend the law relating to Government securities and its management by the Reserve Bank of India and for matters connected therewith or incidental thereto.
It is expedient to consolidate and amend the law relating to Government securities and its management by the Reserve Bank of India.
Parliament has no power to make laws for the States with respect to any of the matters aforesaid. Hence resolutions have been passed by the Houses of the Legislatures of all the States, except the Legislature of the State of Jammu and Kashmir, to the effect that the matters aforesaid to be regulated in those States by Parliament by law.
Forms of Government securities.
A Government security may, be prescribed in one of the following forms, namely:-
- a Government promissory note payable to the order of a certain persons.
- a bearer bond payable to bearer.
- a stock.
- a bond held in a bond ledger account.
A subsidiary general ledger account, including a constituents’ subsidiary general ledger account and a bond ledger account may be opened and maintained by the Bank.
The Government securities may be held on behalf of a constituent in a constituents’ subsidiary general ledger account and the holder of such account shall be deemed to be the holder of the securities held in that account.
Right of holders or several payees.
When a Government security is payable to two or more persons severally and either or any of them dies, the Government security shall be payable to the survivor or survivors of those persons or to the representative of the deceased or to any one of them.
Where any Government security is held on behalf of a minor, the payment due on a Government security either by way of outstanding principal or interest thereon may be made to the father or mother of such minor and where neither parent is alive to a person entitled under the law to have care of the property of the minor.
Power of Bank
Before making any order, the Bank may require the person in whose favour the order is to be made to execute an indemnity bond with one or more sureties to furnish security.
Where the Bank contemplates making an order vesting a Government security to any person, the Bank may, cancel any proceedings already taken for that purpose and may, proceed anew.
Where no shorter period of limitation is fixed by any law, the liability of the Government in respect of any interest payment due on a Government security shall terminate on the expiry of six years from the date on which the amount due by way of interest became payable.
Where a subsidiary general ledger account is opened by the Bank in favour of any holder of a Government security.
- it comes to the notice of the Bank that the said account is being operated contrary to the terms and conditions subject to which the account was opened; or
- the subsidiary general ledger account transfer form has bounced due to insufficiency of Government security or funds; or
- the Bank is of opinion that the account is being operated contrary to the banking practice or in a manner prejudicial to the interests of the holders of Government securities in general; or
- the subsidiary general ledger account is being misused in any manner, then
- the Bank may, by order in writing, after giving an opportunity of being heard, debar the holder of such account from trading with the subsidiary general ledger account facility temporarily or permanently as it deems fit.
Subject to terms and conditions, the holder of a Government security may create a pledge or hypothecation or lien in respect of such security.
The Bank may, issue such directions as it thinks fit, in relation to a Government security:-
- to the holders of the subsidiary general ledger accounts, including constituents’ subsidiary general ledger account.
- to the agents maintaining bond ledger account.
- to any other person dealing with the Government securities, for carrying out the purposes of this Act.
If the person entitled to a Government security applies to the Bank alleging that the Government security has been lost, the Bank may, order the issue of a duplicate Government security to the applicant.
Power to remove difficulties.
- If any difficulty arises in giving effect to the provisions of this Act, the Central Government may, by order, not inconsistent with the provisions of this Act, remove the difficulty.
- Every order made under this section shall be laid, as soon as or may be after it is made, before each House of Parliament.