Circular No. 249/2007-2008
Ref No DGBA.CDD / H- 9362 / 13.04.137 / 2007 - 08
Phalguna 8, 1929 (Saka)
The General Manager
of India and Associate Banks
and 17 Nationalised Banks
ICICI Bank Ltd. /
IDBI Ltd./ HDFC Bank Ltd / Axis Bank Ltd.
Stock Holding Corporation of India
Repayment of 6.5% Savings Bonds, 2003 (Non Taxable)
Please refer to our Loan Circular CO.DT. 13.01.298 / H-3566/2002-03
dated March 15, 2003 regarding issue of 6.5% Savings Bonds, 2003 (Non Taxable).
The said bonds issued in terms of Government of India Notification No. F. 4 (9)
W & M / 2003 dated 15.3.2003 will mature for repayment from March 24, 2008
onwards according to the date of individual investments. The Press Communiqué
dated February 22, 2008 issued by Government of India, Ministry of Finance, Department
of Economic Affairs, New Delhi is enclosed for information. The general procedures
to be strictly adhered to by the Agency banks in connection with the repayment
of the bonds held under Bond Ledger account (BLA) are given below:
Issue of Advices to Investors: The attention of the holders may be drawn to
the ensuing maturity of their bonds one month before the date on which investment
in the BLA is due for repayment as per the format given in Annexure
I (copy enclosed). The advices to the holders should be sent by Registered
/ Speed Post. It should be ensured that the advices are sent only in respect of
BLAs which are free from stoppage.
2. Post Maturity
Interest: As stated in Para 15 of our Loan Circular dated March 15, 2003 the
bonds shall be repayable on expiry of five years from the date of issue. No interest
would accrue after the maturity of the bond. We, therefore, advise you to intimate
to the investors that the investment does not carry Post Maturity Interest,
prominently in the above advices.
Discharge of Certificates by the investors
As per Regulation 24 (2)(b) of Government
Securities Regulations, 2007, (copy of which was forwarded to you vide our letter
DGBA.CDD.H-6298/11.29.002/2007-08 dated December 7, 2007) payment of maturity
proceeds to the registered holder of a Government Security, held in the form of
Bond Ledger Account (BLA) shall be made by pay order or by credit to the account
of the holder in any bank having facility of receipt of funds through electronic
means. For this purpose, in terms of Regulations 24(2)(d) bond holders are required
to submit relevant particulars of their bank account to the Agency banks. This
regulation in effect obviates the necessity of the investor submitting Annexure
1A seeking repayment of bonds and enables Agency banks to automatically redeem
the matured bonds on due date and dispatch the payment advice. To facilitate the
automatic redemption on due dates, holders of BLAs whose bank account details
are not available with you may be asked to furnish the relevant particulars and
a mandate for crediting the proceeds electronically to their account. It may also
be noted that in the absence of mandate, repayment will be made on receipt of
discharge in Annexure 1A, as hitherto. The maturity intimation advice (Annexure
I) has been suitably modified incorporating the above changes and a copy each
the said advice and mandate form to be furnished by the investors is enclosed.
As per extant instructions, the investor
is required to furnish the particulars of his PAN / GIR number, or a declaration
in Form No 60, in case the investor does not have PAN / GIR No, if the amount
of repayment exceeds Rs. 1 lakh.
Payment to the Investors
Although the Receipt (Annexure 1A) is submitted
well in advance for repayment, it should be ensured that actual payment of discharge
value is made only on the due date, and if payment is made through electronic
mode, the investor’s account should be credited on due date only and not before
that. In the event of holiday being declared by the State Government under the
Negotiable Instruments Act, 1881 on the maturity date or maturity date being Sunday,
the maturity proceeds may be made on the previous working day.
(ii) The repayment should be made only by the bank branch
concerned, maintaining the BLA. Details of closure of the investment(s) i.e. date(s)
and amount(s) etc. should be maintained and invariably be indicated in the BLA,
where applicable duly authenticated by the Supervising Official.
If multiple investments are made against
the same BLA, the redemption of individual investment should be reflected therein
and a fresh statement of holding duly indicating the BLA number, date of
maturity and amounts in respect of individual investments may be generated and
given to the investor. It should be ensured that the outstanding balance appearing
in the BLA and the statement of holding are the same.
Delivery of Payment Order: In case of repayment
by issuance of Payment Order it should be ensured that the payment orders bearing
the dates of redemption are prepared and kept ready / dispatched (in case of request
to send by post) so as to reach the holder at least one day in advance and for
senior citizens, three days in advance. The payment order may be dispatched by
Interest payments: As regards BLAs held under
non-cumulative scheme, the interest for last broken period should be paid along
with the principal. The interest warrants pertaining to such investments should
be dispatched on the due date of maturity irrespective of whether the investor
has furnished discharge receipt for repayment or not. While despatching such interest
warrants of matured BLAs, the covering letter addressed to the investor should
indicate that the investment has matured on the specific date. The advices to
the investors should invariably contain the legend "Interest will not
accrue on the investment after ----/ ----/ ---- (date of maturity)".
Accounting: The Principal and the interest
should be separately accounted for and the scrolls drawn separately and kept on
records for audit / verification in terms of the extant instructions issued from
time to time.
Reporting to Government of India: The designated
branches should submit a statement showing the payments and outstanding in respect
of the BLAs under the scheme on monthly basis to the Controller of Accounts, Department
of Economic affairs, Ministry of Finance, Government of India, New Delhi through
their Link Office. The repayment scrolls pertaining to the principal and the interest
should be drawn separately as per Appendix XI & XII of MOP for this purpose.
Reporting to PDO of jurisdiction: The monthly
report sent to the PDO of jurisdiction should invariably contain the details of
repayments in part D of Appendix IV. The repayment scrolls pertaining to the principal
and the interest drawn separately as per Appendix XII of MOP for the month as
above may also be submitted alongside.
Reimbursement from CAS Nagpur: The agency banks may prefer claims for reimbursement
as per paragraph 1.14 and 1.18 (section I) of MOP only in respect of the repayments
effected by them. Such claims may be submitted in the usual manner to CAS,
Nagpur through the respective link cells along with the consolidated scrolls separately
for principal and interest. The claims should be duly supported by a certificate
from the Internal / Concurrent Auditors to the effect that the repayment figures
have been checked 100% and that the amount has already been paid to the investors.
Preservation of Records: The instructions vide paragraph 1.22 of MOP regarding
preservation of records should be followed meticulously.
Advice to designated Banks: Since most of
the branches have computerized their operations, the requisite system changes
required to comply with the above instructions, may please be made well in advance
to avoid any hassles at the operational level and to render better customer service
to the investors. The contents of this circular may please be brought to the notice
of the designated branches concerned urgently.
The above instructions are illustrative and
not exhaustive and should be read with the instructions in the MOP, Government
Securities Act, 2006 and Government Securities Regulations, 2007. In case of any
specific doubts or queries on the above, the designated banks / branches may please
contact the PDO of jurisdiction.
Please acknowledge receipt and monitor compliance.