The Government Securities Act, 2006
Administered Ministry: Ministry of Finance / Department of Economic Affairs
Act details
| Short title | The Government Securities Act, 2006 |
|---|---|
| Long title | An Act to consolidate and amend the law relating to Government securities and its management by the Reserve Bank of India and for matters connected therewith or incidental thereto. |
| Act number | 38 of 2006 |
| Act year | 2006 |
| Enactment date | 30 Aug 2006 |
| Ministry | Ministry of Finance / Department of Economic Affairs |
| Department | Department of Economic Affairs |
| Jurisdiction | Central (Parliament of India) |
| Sections | 36 |
| Status | Not repealed |
| Last checked on India Code | 29 Oct 2026 |
| Source | India Code, Government of India |
Summary
Summary of the Government Securities Act, 2006
Key Provisions
1. Application and Commencement: - Applies to Government securities issued by Central or State Governments.
• Initially excludes Jammu and Kashmir, with later applicability.
2. Definitions: - Key terms defined, including "Government Security".
3. Forms of Government Securities: - Includes promissory notes, bearer bonds, stock, and bond ledger accounts.
4. Management and Transfer: - Transfer Validity: Must convey full title, in prescribed forms.
• Subsidiary Accounts: For dematerialized holdings.
5. Holding and Succession: - Public Offices: Automatic transfer to successors.
• Deceased Holders: Provisions for nominees and small value securities.
6. Issue and Operations: - Duplicate/New Securities: For lost, stolen, or altered securities.
• Pledge/Hypothecation/Lien: Subject to conditions.
7. Regulatory and Legal: - RBI Regulations: With Central Government approval.
• Penalties: For contraventions.
8. Miscellaneous: - Power to Remove Difficulties: Temporary, by the Central Government.
• Repeal and Saving: Repeals the Indian Securities Act, 1920.
Legislative history
Legislative History:
The Government Securities Act, 2006
Short Title The Government Securities Act, 2006
Act Number / Year Act No. 38 of 2006
Act ID (India Code) 200638
Presidential Assent Date August 30, 2006
Enforcement Date December 1, 2007
Nodal Ministry Ministry of Finance
Precedent & Statutory Rationale
1. Obsolescence of Colonial Frameworks:
o Prior to 2006, the legal mechanisms governing the issuance, holding, transfer, and servicing of government debt in India were anchored in legacy enactments specifically the Indian Securities Act, 1920 and the Public Debt Act, 1944.
o These historical statutes were inherently paper-based, rigid, and inadequate for supporting modern electronic trading systems, dematerialized book-entry structures, and efficient secondary market clearing managed by the Reserve Bank of India (RBI).
2. Modernization of Public Debt Administration:
o The legislation was enacted to create a flexible, efficient, and transparent legal framework capable of accommodating electronic record-keeping, simplifying ownership transfers, lowering transaction friction, and strengthening the overall market integrity of government securities.
Parliamentary Trajectory & Enactment
• Formulation: Developed by the Ministry of Finance in coordination with the Reserve Bank of India to structurally reform public debt legislation.
• Parliamentary Passage: Tabled, debated, and passed by both Houses of Parliament during the monsoon session of 2006.
• Presidential Assent: Received formal Presidential Assent on August 30, 2006, entering the statute book as Act No. 38 of 2006.
• Enforcement: Enforced on December 1, 2007.
• Source: India Code and Ministry of Finance Official Gazette Notifications