RBI /2004-05/116
DBOD.FSC.BC.28/24.76.002/2004-05
August 12, 2004
All Commercial Banks (Excluding RRBs)
Dear Sirs,
Transactions in Government Securities
Please refer to the instructions
contained in Bank’s circular No. RBI/2004/123
(IDMD.PDRS.05/10.02.01/2003-04) dated March 29, 2004 under which sale of
government securities already contracted for purchase was permitted provided
certain conditions stipulated therein were satisfied. To enable the implementation
of this relaxation, the settlement of government securities carried out through
CCIL was shifted to DVP-III mode.
2. We have since received enquiries
from market participants to clarify whether the revised regulations are applicable
to Gilt Account holders also, who hold their stock of government securities
in Gilt Accounts maintained with eligible custodians maintaining CSGL accounts
in the Public Debt Office of the Reserve Bank. It is clarified that, for the
present, the revised regulations contained in the above circular will not
be applicable to transactions of Gilt Account holders. Accordingly, Primary
Dealers who act as custodians (i.e., CSGL account holders) and offer the facility
of maintaining Gilt Accounts to their constituents should not permit
settlement of any sale transaction by their constituents unless the security
sold is actually held in the Gilt Account of the constituent. It is further
clarified that the relaxations permitted in the above circular are also not
applicable when the counterparty in the purchase contract is a Gilt Account
holder with the custodian itself. You may note to advise all your constituents
holding Gilt Accounts with you of this position.
3. Please acknowledge receipt.
Yours faithfully,
(P. Vijaya Bhaskar)
Chief General Manager
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