This policy clarification, RBI/2019-20/86, IDMD.CDD.No.114514/04.05.020/2019-20, issued by the Reserve Bank of India (RBI) on October 30, 2019, addresses the process of marking liens on Sovereign Gold Bonds (SGBs). It is directed to all Scheduled Commercial Banks (excluding RRBs), Designated Post Offices, Stock Holding Corporation of India Ltd. (SHCIL), BSE, NSE, Depositories, and Depository Participants.
The circular clarifies that SGBs, issued as Government of India Stock, are held either in Bond Ledger Accounts (BLA) within RBI's e-Kuber system or in dematerialized form with a Depository. A Certificate of Holding (COH) serves as proof of investment for bonds held in BLA form. For dematerialized bonds, title verification is done through demat statements from Depositories.
Banks have lien marking rights for bonds held in BLA form, and must record liens using the e-Kuber portal facility to create a valid lien. For dematerialized bonds, depositories mark the lien, following standard practices for stocks and shares used as collateral. Detailed lien marking procedures are available in the user manual on the RBI website.
The RBI advises institutions to disseminate this information widely among operational personnel to avoid customer inconvenience due to a lack of staff knowledge regarding these procedures.
For further information, contact the Internal Debt Management Department, Central Office, Central Office Building, 23rd Floor, Shahid Bhagat Singh Marg, Mumbai-400 001, India. Tel: 022-2266160204; Fax: 022-22644158, 22705125; Email: cgmidmd@rbi.org.in.
Key Entities Referenced
Reserve Bank of India: The central bank of India, referred to as RBI in the document. The document number indicates its origin from RBI.
Sovereign Gold Bond Scheme: A government scheme related to gold bonds, abbreviated as SGB. The notification discusses lien marking on these bonds.
Scheduled Commercial Banks: Banks that are included in the second schedule of the Reserve Bank of India Act, 1934, excluding Regional Rural Banks (RRBs).
Stock Holding Corporation of India Ltd: A financial institution, abbreviated as SHCIL, listed along with other entities to whom the circular is addressed.
BSE: Bombay Stock Exchange, a stock exchange where bonds can be held in dematerialized form.
NSE: National Stock Exchange of India, a stock exchange where bonds can be held in dematerialized form.
Government Securities Act, 2006: A law governing government securities, specifically Section 28 is mentioned in relation to pledge, hypothecation or lien on bonds.
Government Securities Regulations, 2007: Regulations pertaining to government securities, specifically Chapter VII is mentioned in relation to pledge, hypothecation or lien on bonds.
RBI/2019-20/86
IDMD.CDD.No.1145/14.04.050/2019-20 October 30, 2019
All Scheduled Commercial Banks (Excluding RRBs)
Designated Post Offices
Stock Holding Corporation of India Ltd. (SHCIL)
BSE & NSE
Depositories/Depository Participants
Madam/Sir,
Sovereign Gold Bond (SGB) Scheme - Marking of lien
As you are aware, the Sovereign Gold Bonds may be used as collateral by both banks
and non-bank institutions and the creation of pledge, hypothecation or lien on the
bonds shall be governed by Section 28 of the Government Securities Act, 2006 and
Chapter VII of the Government Securities Regulations, 2007. In this regard, we have
been approached by several banks and non-bank entities desirous of knowing whether
the Certificate of Holding (COH) held by a bond holder is a valid proof of its title and
the procedure for marking lien on the said bond.
2. In this regard, we clarify that SGBs are issued in the form of Government of India
Stock and are held either as Bond Ledger Account (BLA) in RBI’s E-Kuber system or
as dematerialised bond with the Depository. The investors are issued COH as a proof
of investment if the bonds are held in BLA account with RBI. In case the bonds are
held in dematerialized forms, the title of a holder could be verified from the demat
statements provided by Depositories.
____________________________________________________
आंत�रक ऋण प्रबंध �वभाग, क�द्र�य कायार्लय, क�द्र�य कायार्लय भवन, 23 वीं मंिज़ल, शह�द भगत �सहं माग,र् मुंबई - 400 001, भारत
फोन: (022)-22661602-04; फैक्स : (022)-22644158, 22705125; ई-मेल: cgmidmd@rbi.org.in
Internal Debt Management Department , Central Office, Central Office Building, 23 rd Floor, Shahid Bhagat Singh Marg, Mumbai-400 001, India
Tel: (022)-22661602-04; Fax : (022)-22644158, 22705125; E-mail: cgmidmd@rbi.org.in
�हदं � आसान है, इसका प्रयोग बढ़ाइए
चेतावनी: �रज़व र्ब�क �ारा ई-मले , डाक, एसएमएस या फोन-कॉल के ज�रए �कसी भी व् यि� क� जानकारी जैसे बैक के खाते का ब् यौरा, पासवड र्आ�द नह� मांगी जाती ह।ै यह धन रखन ेया
दने े का �स् ताव भी नह� करता ह।ै ऐस े�स् ताव� का �कसी भी तरीके स ेजवाब मत दीिजए।3. As regards the lien marking rights in case of bonds held in BLA form, the same is
provided to the banks. It may be mentioned that in order to create a valid lien, the lien
marking should be recorded by the banks extending the loan by using the facility
provided on the E-Kuber portal. In case of dematerialized bonds, the lien is marked
by the depositories in line with the practice followed for stocks and shares which are
accepted as collateral by the banks. The detailed procedure for marking of lien is
provided in the user manual on our website under the link for guidance please see the
User Manual available at our website
4. We also advise that the information on lien marking facility in respect of SGBs as
described above may be given wide dissemination amongst the personnel in operation
in the organisation so that customers are not inconvenienced on account of lack of
knowledge among the staff.
Yours sincerely,
(T. K. Rajan)
Chief General Manager