The Government Securities Act, 2006 was enacted by Parliament in 57th year of Republic of India on 30 August 2006 to amend the government security laws and to manage it by Reserve Bank of India. It applies to all the States and Union Territories of India. It applies even to Jammu and Kashmir if it adopts the Act as provider under Article 252 of our Constitution.
Section 2 of the Act explains various definitions that are used in the Act like Agent, Bank Bond Ledger Account, Constituents, Government, Government Security, Prescribed, Promissory Note etc. Section 3 of the Act explains about different types of Government securities like Government promissory note, bearer bond, stock, and bond kept in bond ledger account. Stock means a security that has been registered in the bank and a certificate has been issued on it or it is a credit of holder kept in the book of banks which can be transferred by registration in book of bank.
Section 4 states about the Subsidiary general ledger account. The bank can open and maintain a bond ledger account with specified conditions and also after a prescribed fee has been paid. One exception here is that notwithstanding anything described in Benami Transactions (Prohibitions) Act or any other law the above government securities can be held by a constituent in the general ledger and can he/she shall be the holder of securities of that account. Such a holder should maintain the records and follow the procedure to safeguard its interest too.
Transfer of Government securities is explained under Section 5 of the Act. Any transfer of the government security has to be done completely i.e. with its full title of the security should be transferred if not then the transfer is not valid. Transfer should be made through proper prescribed way. Even a person who cannot write can apply for government security or the government can issue an endorsement on promissory note to such a person. Nothing stated in this section will affect any order that has been made by a court on the bank.
Section 6 explains about the government securities that has been held by the public offices. Section 7 explains about the issuing of the securities upon the death of the sole holder if no nomination is there then it has to be given to the holder of succession certificate. Rights of surviving holder, nomination by holders of the securities, minor’s government securities, issue of duplicate securities, or renewal of it, disputed certificates, postponement of the payment or interest, publication of notices in official gazette are all discussed in detail in the act.
No one can inspect any book that is under government custody. Even micro films, facsimile copies of documents, magnetic tapes computer print outs all will be considered a document.
Bank officers will be considered a public officer under the Act. If any holder misuses the general ledger or acts contrary to its terms and conditions then holder can be debarred from trading with such an account permanently by giving written notice. The holder of government security can pledge or hypothecate with respect to such security upon prescribed terms and conditions given under the Act. Bank has the right to call for any information from the holder of subsidiary general ledger or scrutiny through any officer can be made and issue any kind of directions to the holder or any other person dealing with it.
If any person gives false statement to any officer to obtain for himself any title to the security then he shall be punishable for a term which can extend to 6 months or with fine or both. Cognizance of an offence cannot be taken by the court without a complaint from the bank itself.
Certain laws like Public Debt Act, and Depositories Act 1996 does not apply to Government securities Act. To carry out the purpose of this Act the Bank can make rules and regulations after approval from the Central Government through Gazette notification. Section 35 deals with repeal provisions and that the Indian Securities Act 1920 has been repealed.
by Sushma Javare