Date:05/08/2005 URL: http://www.thehindubusinessline.com/2005/08/05/stories/2005080503970900.htm

Back `Govt can create fund for unclaimed G-sec dues'

Our Bureau

New Delhi , Aug. 4

THE Government should explore the possibility of creating a dedicated fund for keeping the unclaimed amounts in respect of Government securities, the Standing Committee on Finance has suggested.

In its report on `The Government Securities Bill 2004,' the Standing Committee, chaired by Maj. Gen (Retd) B.C. Khanduri, has recommended that the accruals to this fund could be utilised for enabling post-maturity interest payments in bonafide cases.

Currently, the unclaimed amount in respect of Government securities stood at Rs 354.56 crore. While taking note of the fact that allowing the payment of post-maturity interest would weaken the very concept of maturity, the committee 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 said in its report that necessary administrative instructions should be issued for the mandatory release of advertisements in the print and electronic media, informing the general public or the Government-security-holders of the maturity dates at least two months in advance. Such a measure would help ensure that people are not unnecessarily deprived of their legitimate dues.

While the principal component of amounts involved in Government securities are kept alive in the record books for 20 years, the interest component on such amounts ceases to be payable beyond the six-year period.

The Committee felt that keeping the principal component (for Government securities) alive for 20 years, but limiting the liability on interest payment to a maximum period of six years may prove to be too stringent. Once enacted, the new Government Securities legislation will replace the Public Debt Act 1944 and also repeal the Indian Securities Act 1920.