What is SGL in banking

Friends, today we are going to learn in this article What is SGL in banking? The full form of SGL is a subsidiary general ledger. If a person wants to buy shares or mutual funds, or bonds, he needs a Demat account.

He is buying all his shares, mutual funds, or bonds from this Demat account. It was a common man’s bond purchase transaction.

But if Bank wants to invest in such bonds or mutual funds or buy and sell them, then you have to know how it is done. Let’s understand it.

What is SGL in Banking
What is SGL in Banking

SGL is also a type of Demat account. The only difference is that the SGL account is opened by banks or financial institutions in RBI bank. In which the bank keeps government bonds and treasury bills.

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News about HDFC bank –

The bank has to maintain this SGL account with RBI properly otherwise the fine is levied on this account by RBI. This is what happened in the case of HDFC bank. HDFC bank could not maintain her SGL account regularly. Let us know what exactly happened in the case of HDFC bank that this bank was fined Rs 10 lakh by RBI.

According to the RBI, the penalty was imposed on HDFC Bank because the bank failed to maintain the required minimum capital in Subsidiary General Ledger (SGL), which pushed SGL to the top.

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HDFC Bank received the RBI order on December 9 and disclosed it on December 10. The Reserve Bank of India (RBI) said in a notification that HDFC Bank has been fined Rs 10 lakh for the leak of SGL, which led to a shortfall in the balance of some securities in the bank’s CSGL account on November 19.

Significantly, the valuation of the stock has seen a decline recently after the central bank announced a ban on the launch of digital business generating activities of this private bank under its program Digital 2.0 and a ban on sourcing new credit card customers. Was.

Explain that this penalty imposed on the bank will not have any direct effect on the customers. Their deposited capital in the bank, interest received, etc. will not have any effect on anyone. In this case, the account holders do not need to take any tension.

Who can open an SGL account?

What are the qualifications required to open an SGL account by RBI bank? Find out which organizations are eligible to open SGL accounts.

What is SGL in Banking
What is SGL in Banking
  1. licensed bank
  2. Primary Dealer
  3. Financial Institutions as defined in Section 45-1 (c) (ii) of the RBI Act, 1934. And such financial institutions should have obtained a no-objection certificate from the concerned regulatory department of the bank.
  4. Central Government
  5. State Government
  6. Insurance companies that are regulated by the IRDA (Insurance Regulatory and Development Authority).
  7. Mutual funds are regulated by SEBI (Security and Exchange Board of India).
  8. Provident or pension funds with an investment of Rs 500 crore or more in government securities.
  9. Foreign Central Bank with the consent of the Bank
  10. Apart from this the following institutions can open SGL accounts in the bank.
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(a) National Securities Depository Limited (NSDL).

(b) Central Depository Services (India) Limited (CDSL).

(c) Stock Holding Corporation of India Limited (SHCIL).

(d) Other such institutions are approved by the Bank from time to time.

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Condition for opening SGL account-

  1. Eligible entity can open more than one SGL account or monitor accounts only with the permission of the bank, otherwise, the eligible entity can open and maintain only one SGL account.
  2. The SGL account holder will not be eligible to open a component account with any constituted subsidiary general ledger account holder. The SGL account holder can then open a constituted account with a specific institution for regulatory and margin purposes and obtain approval from a specific bank.
    What is SGL in Banking
    What is SGL in Banking
  3. Value-free transfer of government securities from one SGL account to another SGL account by a bank (VFT) or transfer of securities to one’s Demat account with bank deposit may be permitted. Clearing Corporation of India Ltd. (CCIL) for loan operations (CBLO) or any other purpose approved by the Bank from time to time.
  4. The SGL account holder can apply to Corporation of India Ltd. Settlement account should be kept in any designated bank approved by (CCIL) from time to time, so that the bank can settle the transaction funds related to the SGL account.
  5. The SGL account holder may be allowed to keep a current account or RTGS settlement account with the bank subject to the approval of the bank as per the current policy.
  6. The institution opening the SGL account will submit the bond, application, and other documents along with the approval of the relevant rules as decided by the bank.
  7. SGL account can be opened in their loan office as decided by the bank.
  8. When closing an SGL account, the account holder can submit the reason and request letter for closing the SGL account. The account can be closed.
  9. A penalty is levied if the SGL account facility is misused by the concerned account holder. Also, the account holder will be barred from holding such an SGL account as mentioned in the Government Securities Act.
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