At present, rule 7(3) of the Public Debt Rules defines the instruments through which government securities can be transferred from one holder to another. "As per the current provisions, the RBI has no powers to design and introduce such instruments of transfer (transfer forms) without amending the rules," the RBI sources said.

The Act proposes to introduce a new section which will make nomination facility by the holder of government security applicable to individual and joint holder of stocks for all government loans and delete the existing sections 9A, 9B and 9C of the Public Debt Act. Under the existing Act, nomination facility by the holder ofgovernment security in the form of stock is available only for special schemes introduced by the Government of India. This facility is not available for government securities of market loans.

The new Act also proposes to introduce screen-based settlement system for faster and efficient trading. According to sources, the screen-based settlement system will bring in more transparency in government securities transactions. Under this system, SGL transfer form will be replaced by the screen format in which buyers and sellers will be able to independently communicate the request to buy or sell, quoting a common transaction number.

The Act proposes to delete sections 27 to 30 of the Public Debt Act and make bouncing of SGL transfer form as a legal offence. Another provision is made in the new Act debarring the SGL account holder from trading in government securities with the use of SGL account at the offices of the bank in case of any misuse of the facility.

The section 32 of new Act proposes to keepgovernment securities outside the ambit of Depositories Act. "The new section has an in-built flexibility to introduce government securities into depositories in future if the need arises," sources said.

The Act will give powers to the RBI to recognise the claim of legal representatives of the holder of government securities on the basis of a decree or court order as specified in the section 7 of the new Act.

At present, under the existing provision, the RBI is not allowed to entertain claims of legal representatives of a sole holder on the basis of any other document except probate, succession certificate or letters of administration.