Panel for dedicated fund for unclaimed govt securities

New Delhi, Aug 4 | Updated: Aug 5 2005, 05:30am hrs
The Standing Committee on Finance has urged the government to explore the possibility of setting up a dedicated fund for unclaimed government securities. The accruals in the fund, it suggested, could be used for payment of interest beyond maturity periods in bonafide cases.

The Committee headed by Lok Sabha member BC Khanduri suggested these changes in Clause 23 of the Government Securities Bill 2004 which was referred to the Parliamentary committee for comments. The report of the committee was tabled in Parliament on Thursday.

According to Clause 23 of the Bill, the liability of the government in respect of any interest payment due on a government security will terminate on the expiry of six years from the date of maturity.

At present around Rs 355 crore is lying unclaimed in respect of government securities. As per the current practice, the principal component of amounts involved in government securities is kept alive in record books for a period of 20 years, although the interest component on such amounts ceases to be payable after six years. The committee felt that limiting the liability on interest for six years is too stringent, particularly for those who may not claim the amounts on the due dates due to bonafide reasons.

The committee, while taking note of the fact that allowing payment of post maturity interest would weaken the concept of maturity, said that legitimate space needs to be given to ensure that persons who may not claim the amounts by the due dates owing to genuine reasons are not deprived of their dues.

The committee, it may be mentioned, examined the suggestions of Indian Banks Association, Fixed Income Money Market and Derivative Association of India and PNB Gilts before taking up its views on the Government Securities Bill.