Who can open an SGL-II account?

As per the guidelines issued by RBI, an intermediary can get the permission from RBI to hold Constituent SGL Account with RBI on behalf of its constituents provided the said intermediary meets certain pre-fixed requirements set by RBI. National Securities Clearing Corporation Ltd. Is one such intermediary that has been permitted by RBI to hold SGL-II accounts on behalf of its constituents. Any person, a body corporate, a Pension Fund, a Provident Fund, etc. are eligible to open such accounts with NSCCL provided they submit the requisite papers to NSCCL.

NSCCL facilitates transaction in Government securities of its constituents, provides facilities for dematerialisation, rematerialisation, value free transfer, Inter city transfer, Interest payment and Redemptions, participation in Primary Auctions and OMOs, etc.

NSCCL provides this facility in major metro centers. The lower transaction cost and annual holding charges are added benefits provided to constituents. NSCCL also provides same day credit facility for sellers and high value facility for buyers subject to certain conditions. It has tied up with a clearing bank, Global Trust Bank for speedy cash transactions. NSCCL normally issues post-dated cheques for all interest payments and redemptions so that cash can be utilized by the constituent on the day of actual interest payment and redemptions.

Account opening forms need to be filled in (the same can be downloaded from NSE web site: nse-india.com) by the constituent and the documents as stated in the annexure of the account opening form. The major documents are the list of Authorised Signatories, Trust Deed, Balance Sheets for last three years, passport sized photographs, etc.

Authorised Signatories of corporate bodies, PF Trusts, etc. and individual account holders or their power of attorney holders can sign the papers for opening the SGL-II accounts.

It is a very simple process and once the application with the required details and documents are received, accounts are opened immediately by NSCCL and constituents can operate their account.

There is a standard form designed by NSCCL which records all details of the transactions. The same needs to be signed and sent by constituent either by fax or by surface mail or by hand delivery. The instructions should be clear.

It is the process through which securities held in physical form are converted into book entry form or electronic form. Any constituent can submit the necessary form of transfer and authorization letter to convert the physical certificates into electronic form to be held in SGL-II account with NSCCL. It normally takes a week for dematerialization at RBI.

The process of converting electronic holding of securities into physical form is known as rematerialisation. A constituent can give request in a specific form for rematerializing his holding in part or full. The rematerialisation process takes about 15 days at RBI.

Once a constituent enters into a buy trade with a seller, he informs NSCCL giving details of the transaction and date of settlement. On settlement day, he needs to have cash in his GTB account or he can deposit a cheque in NSCCL's favour at Global Trust Bank, Fort Branch sufficiently before the settlement day so that clear funds are available for transfer to RBI. Once the funds are available, NSCCL transfers the same from the clearing bank (GTB) to RBI during banking hours. RBI debits NSCCL's funds account if the trade goes through without any problem and credits the securities balance to NSCCL's SGL-II account. In turn NSCCL credits the buyer account in its database.

Once a constituent enters into a sell trade with a buyer, he informs NSCCL giving details of the transaction and date of settlement. On settlement day, he needs to have securities balance in his account with NSCCL so that clear securities balances are available for transfer at RBI. Once the securities are available, RBI debits the same from NSCCL's account and credits NSCCL's fund account if the trade goes through without any problem. In turn NSCCL credits the seller's funds account with GTB or issues a cheque in favour of the constituent.

Securities balances can be transferred from one center of PDO, RBI to another center if the constituent requires the same. The same is provided in major metro centers where NSCCL offices exist. It helps a constituent to trade in the same in desired centers.

Normally all securities are settled in DVP mechanism. But in few exceptional cases, RBI permits value-free transfers.

Third party rematerialisation implies rematerialisation in the name of an entity as per the choice of the constituent. Specific forms need to be filled in for the same and submitted to NSCCL for onward processing at RBI.

All eligible entities as defined by RBI can participate in open market operations announced by RBI from time to time. NSCCL on behalf of such clients can participate in Open Market Operations.

Funds need to be routed through NSCCL's Clearing Bank account at Global Trust Bank and hence all monies due are to be transferred to the said account by constituents before the deal is settled. Similarly all payouts are made from NSCCL's Clearing Bank account at Global Trust Bank.

Interest Payment is made by RBI on due dates and the same is credited to NSCCL's funds account with DAD, RBI. Once the same is credited, NSCCL issues cheques in favour of the constituents or issues instructions to the Clearing Bank, GTB to transfer the funds to constituent's account in case the constituent has the funds accounts with GTB. Normally NSCCL issues post-dated cheques and transmits the same to constituents a day prior to the actual date of payment so that the constituents can use the funds when the same is paid out.

Redemptions are made by RBI on due dates and the same is credited to NSCCL's funds account with DAD, RBI. Once the same is credited, NSCCL issues cheques in favour of the constituents or issues instructions to the Clearing Bank, GTB to transfer the funds to constituent's account in case the constituent has the funds accounts with GTB. Normally NSCCL issues post-dated cheques and transmits the same to constituents a day prior to the actual date of payment so that the constituents can use the funds when the same is paid out.

Constituents can give instructions in necessary forms to NSCCL to participate on their behalf in Primary Auctions announced by RBI from time to time. Funds need to be made available in NSCCL's clearing bank account on the primary auction day so that, they can be transferred to RBI. If successful in the auction, securities would be credited to NSCCL's SGL account and it would be intimated to the constituent by NSCCL and his account will be credited. If the constituents' bids were not accepted then, funds would be refunded.

Form III for transfer of securities in SGL, Form 46 for Dematerialisation Request, Form 47 & 47A, for Rematerialisation in self and third party names, form 135 for Inter city transfers and form 43 for conversion request where RBI gives option to convert a particular security into a new security being issued on redemption of the existing security. NSCCL fills in form 43 for the same for submission to RBI.

By way of enquiry over phone giving proper identity. NSCCL proposes to provide the same through Internet.

Yes, Every month, detailed securities holding balances statement are mailed to constituents.

Transaction costs are very low. NSCCL charges Rs.50/- per trade instruction and Rs.1000/- as annual holding charges. No other hidden costs are involved.

Price of trade has to be multiplied by the value of trade and accrued interest to be added to get the consideration for a trade.

NSCCL provides the facility from Mumbai, Delhi, Calcutta, Chennai and Ahmedabad. Account opening charges are nil provides effective and efficient services. Many other value-added services like information on current market prices are given on case to case basis on the request of the constituent.