COMMENTARY
INTERVIEWS
SPECIALS
CHAT
ARCHIVES

Improved Act for government securities approved

The Union Cabinet on Wednesday approved the proposal for repeal of the Public Debt Act 1944 -- the law relating to government securities and their management by the Reserve Bank of India -- and its replacement by the Government Securities Act.

Government sources said, over the years, a number of rigidities have been noticed in the PD Act and rules. The procedures prescribed therein were time-consuming and some of the provisions had ceased to be of relevance in the present context.

The sources said, the public was also been put to inconvenience because of the archaic procedures. In the wake of the tremendous increase in the volume of public debt, the Reserve Bank of India, the agency banks and treasuries were handicapped in improving customer service, it said.

The PD Act deals with very limited aspects of government debt. Such as form of securities, transfer and registration of securities, nomination facilities procedure for payment in case of death of holders or loss of securities, the sources said.

Further, the present Act dates back to pre-Independence days when the marketable debt with which this Act deals constituted almost the entire borrowing of the government. This is no longer valid as the non-marketable debt or liabilities of the central government, such as National Savings Schemes, Indira Kisan Vikas Patra, Public Provident Fund Scheme, special deposits of non-government provident funds and reserve funds and deposits were Rs 2.76 billion at the end of 1996-97, sources said.

In the circumstances, the title of the Act gives a wrong impression that it encompasses all aspects of government borrowing, the sources said.

The government, therefore, proposed that the Public Debt Act, 1944 be repealed and a new legislation titled the Government Securities Act be enacted.

UNI