Constituent SGL account (Gilt Accounts)
Constituent SGL account is opened by the bank for constituents who wish to invest in government securities and treasury bills. Bank will in effect maintain a demat account for these instruments in the name of the constituents.
These accounts are opened under strict guidance of the Reserve Bank of India and helps in avoiding physical holding of securities. Since the periodic coupon payments are automatically credited to the SB/CD account of the constituent, follow up off interest payments can be avoided.
Who can open a GILT account
Individuals, resident NRI’s, firms, HUF, institutions, NRI’s, PF/ Pension/ Gratuity trusts, urban/town/ primary/ district co-operative banks, credit co-operative societies/ Non banking financial companies/ brokers/ financial intermediaries etc
Procedure for opening GILT account
A Gilt account can be opened by submission of the following documents in the nearest branch of the Federal Bank.
1.Application for opening a Gilt account duly supported by relevant documents.
2.Agreement executed in stamp paper (stamp duty varies from state to state).
3.Application for opening CD/SB account with necessary documents.
Advantage of maintaining a GILT account
Securities are credited to the gilt account on the value date of purchase/allotment. The transaction amount is debited from the fund account (SB/CD) of the Gilt account holder only on the date of purchase/allotment in the case of auctions. Sale proceeds are credited to the SB/CD account of the gilt account holder on the date of sale itself.
Periodical interest is credited to the fund account on due dates. Redemption amount is credited to the SB/CD account on due dates. There is no risk of theft / fraud / misappropriation / loss as the holdings are in demat form.
Delay is transfer of securities is fully eliminated. It is possible to do transactions in smaller amounts. Statement of Balance in the gilt account is available on request The delivery and settlement is guaranteed by CCIL hence there is no counterparty risk.
Services offered to the GILT account holder
Dematerialization of securities held in physical form,
Subscription to government securities through competitive and non competitive bidding. Provide market related quotes for security transaction on request.
Undertake purchase and sale of Government securities in the secondary market. Free fund transfer facility for enabling security transaction.
Collection of periodical interest and redemption of the securities for credit to CD/SB account.
Provide training in dealing and setting up treasury of the constituents.
Advisory services for purchase/sale of securities and for placing bids in security auctions.
The following documents are required
1. Application Form
2. Agreement
3. Identity and address proof of the operators of the account
4. Copy of PAN card of the operators 5. Resolution of the Board/Trust