Value free transfer guidelines by RBI

Value Free Transfer of Government Securities

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 Value Free Transfer of Government Securities

A reference is invited to Notification No.183 dated September 05, 2011, of Value Free Transfer of the Government Securities. A revision was made further in the Notifications dated 29.10.2018. Separate guidelines are issued for VFT to enable more efficient operations in the Government Securities market. Value-free transfer of one security means the transfer of securities from one SGL/CSGL to another SGL/CSGL account, without considering. Such transfer can be done on account of posting at margins, inter-depository transfer of the government securities that are arising from the trades. Value Free Transfer would also be required for the distribution of the securities.

Permitted Transaction under Value Free Transfer 

 The following transaction shall be eligible for Value Free Transfer of the Government Securities:

  1. Transfers on account of Gifts and inheritance between one CSGL account to another.

2. Inter depository transfers (between CSGL accounts of the depositories) that are arising out of the following:

  • own account transfer of securities by the investors/brokers that holding accounts in more than one depository.
  • Trades in the exchange between the constituents of different depositories.

      3. Transfer from CGSL accounts of clearing corporations to the CSGL account of the depositories or to the other CSGL holders for onward transfer to the clients for distribution of the securities that  are allotted during the primary auction settlement;

     4. Transfer of securities on account of mergers and amalgamation;

     5. Transfer of securities on account of the change of the custodian by Foreign Foreign Portfolio investors, subject to approval by SEBI

6. Own account transfer of securities from SGL/CSGL accounts to the CSGL of the depositories, where there is no change in the beneficiary ownership

7. Gilt Account Holder’s Transfer of securities from one CSGL account to another CSGL account to close the gilt account with one CSGL account holder and open a new gilt account with another  CSGL account holder.

8. Transfer of securities about margin requirement/ collateral posting in the following cases:

  • Transfer of margin/ collateral between Clearing Corporation of India Ltd (CCIL) and the members of CCIL.
  • The transfer of margin/collateral under the Credit support annexes (CSA) and the Global Master Repurchase Agreement (GMRA) provided that the margin/ collateral should be in a separate CSGLI account that is opened with the RBIs permission. Appropriate documentation is to be maintained.

9. Posting of the Government securities as margin/collateral in all segments of the recognized stock exchanges.

Permission for Value Free Transfer for any other purpose may be granted on a case-to-case basis. Applications for the same may be submitted to by Public Debt Office, Mumbai Regional Office, RBI, Fort, Mumbai – 400 001.

These guidelines are issued by the Bank in the exercise of the powers conferred under Notifications dated October 29, 2018, on Subsidiary General Ledger Account: Eligibility Criteria and Operational Guidelines and Constituents’ Subsidiary General Ledger Account: Eligibility Criteria and Operational Guidelines and supersede earlier instructions issued on the subject matter. Any violations of the conditions specified therein shall attract provisions of Section 27 of the Government Securities Act, 2006 (38 of 2006), in addition to inviting penalties as provided in Section 30 of the Act ibid.

Yours faithfully Sd/-

(A.Mangalagiri)

Chief General Manager

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