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Power to prohibit contracts in certain cases - Notified contracts - SO 131(E). - Companies LawExtract Notification: No. SO 131(E), dated 22-1-2003 Securities Contracts (Regulation) Act, 1956 Subject:- Power to prohibit contracts in certain cases - Notified contracts S.O. 131(E).- In exercise of the powers conferred on the Reserve Bank of India under section 16 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956) vide Government of India Notification No. 183(E) dated 1st March, 2000, issued under section 29A of the Act, ibid., the Reserve Bank of India Being of the opinion that it is necessary to prevent undesirable speculation in securities in the whole of India, hereby declares that no person in the territory to which the Act extends, shall, enter into any: (a) contract for the sale or purchase of Government securities, gold related securities and money market securities other than spot delivery contract or such other contract traded on a recognised stock exchange, as is permissible under the said Act, rules and bye-laws of such stock exchange. (b) ready forward contracts in bonds, debentures, debenture stock, securitised debt, and other debt securities issued by any person or any body corporate established by or under a Central or State Act: Provided that ready forward contracts may be entered into in all Government securities, in accordance with the terms and conditions as may be specified by the Reserve Bank of India, by the following persons/entities: (a) any person or entity holding a Subsidiary General Ledger account with the Public Debt Office of the Reserve Bank of India; (b) a scheduled bank or a non-banking financial company registered with Reserve Bank of India (other than Government Companies as defined in section 617 of the Companies Act, 1956) or a housing finance company registered with National Housing Bank, or a mutual fund registered with Securities and Exchange Board of India, or an insurance company registered with Insurance Regulatory and Development Authority, holding a Gilt account with any person or entity permitted by Reserve Bank of India to maintain Constituent Subsidiary General Ledger account with Public Debt Office of the Reserve Bank of India, or (c) any other person specifically permitted by Reserve Bank of India, holding a Gilt account with any person or entity permitted by Reserve Bank of India to maintain Constituent Subsidiary General Ledger account with Public Debt Office of the Reserve Bank of India: Provided further that no ready forward contracts may be entered into between two persons or entities both maintaining Gilt accounts with same person or entity maintaining Constituent Subsidiary General Ledger account with the Public Debt Office of the Reserve Bank of India: Provided further that no ready forward contracts may be entered into between a person or entity maintaining Subsidiary General Ledger account with Public Debt Office of the Reserve Bank of India with another person or entity maintaining a Gilt account with itself: Provided further that all ready forward contracts shall be settled through a Subsidiary General Ledger account or a Constituent Subsidiary General Ledger account maintained with the Public Debt Office of Reserve Bank of India, in accordance with the terms and conditions as may be specified by the Reserve Bank of India: Provided further that the outstanding ready forward contracts shall continue till termination of the contracts as per the contractual terms: Provided further that such contracts entered into on the recognised stock exchanges shall be entered in accordance with (a) the rules or regulations or the bye-laws made under the Securities Contracts (Regulation) Act, 1956 (42 of 1956) or the Securities and Exchange Board of India Act, 1992 (15 of 1992) or the directions issued by the Securities and Exchange Board of India under the said Acts; (b) the rules made or guidelines or directions issued under the Reserve Bank of India Act, 1934 (2 of 1934) or the Banking Regulation Act, 1949 (10 of 1949) or the Foreign Exchange Management Act, 1999 by the Reserve Bank of India. (c) the provisions contained in the notifications issued by the Reserve Bank of India under the Securities Contracts (Regulation) Act, 1956 (42 of 1956). Explanation For the purpose of this notification: (a) scheduled bank means a bank included in the second schedule of Reserve Bank of India Act, 1934. (b) non-banking financial company means a company as defined in clause (f) of section 45-I of the Reserve Bank of India Act, 1934. (c) mutual fund means a fund as defined in clause (q) of the Regulation 2 of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996. (d) Constituent Subsidiary General Ledger account means a Subsidiary General Ledger account opened and maintained with the Public Debt Office of the Reserve Bank of India, by a bank or any other person permitted by the Reserve Bank of India, for the purpose of holding Government securities on behalf of its constituents. (e) Gilt account means a securities account opened and maintained by any person with a bank of or any other person permitted by the Reserve Bank of India to open and maintain Constituent Subsidiary General Ledger account with the Public Debt Office of the Reserve Bank of India. This notification is issued by Reserve Bank of India, in supersession of the notification No. S.O. 185(E), dated 1st March, 2000 issued by it.
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