PUBLIC DEBT MANAGEMENT AGENCY

[Mr. M. GOVINDARAJAN]

Chapter VII of the Finance Bill, 2015 deals with ‘Public Debt Management Agency’.  Clause 118 to clause 142 of the bills gives provisions for the public debt management agency.   This Chapter contains V Chapters as detailed below:

Part I - Preliminary - Clause 118 to 119;

Part II - Establishment of Public Debt Management Agency - clause 120 to 123;

Part III - Functions and Powers of Public Debt Management Agency - Clause 124 to 132;

Part IV - Finance, Accounts and Audit - Clause 133 to Clause 138; and

Part V - Miscellaneous - Clause 139 to 142.

Applicability

This chapter extends to whole of India.  The provisions of this Chapter apply to Jammu and Kashmir only if the state passes a resolution in that behalf.   This Chapter will come into effect from the date the Central Government appoint.   Different dates may be appointed for different provisions.

Establishment of Public Debt Management Agency

• The Agency shall be a body corporate having perpetual succession and a common seal with  power, subject to this chapter, to acquire, hold and dispose of property both moveable and immoveable, and to contract, and shall by the said name, sue or be sued;
• The head office will be notified later.  The Agency may open its branches at any other place outside India;
• The object of the agency is to minimize the cost of raising and servicing public debt over the long term within an acceptable level of risk at all times, under the general superintendence of the Central Government;
• The Agency shall have the Board-

• The general superintendence, direction and management of the  affairs and business of the  agency shall be vested in the Board;
• The Board shall consist a Chairperson;
• The Board may set up advisory councils to give advice for the matters the Board may require.

• The composition of the Board is as follows:

• The Board may consist of such number of executive members and nominee members as appointed by Central Government;
• The executive members shall include the Chief Executive Officer;
• The nominee members shall consist of -

• A nominee of the Central Government; and
• A nominee of the Reserve Bank of India.

• The duration of office and other conditions of service of the Chairperson and members of the Board  shall be such, as may be prescribed;
• The Central Government may terminate a member before the tenure period by giving a notice  of not less than three months  in writing or three months salary in lieu of notice;
• The member may relinquish his office before the tenure period by giving three months notice  in writing;
• The Central Government may remove a member from the office, if he-

• Is, or at any time has been, adjudicated as insolvent; or
• Is of unsound mind and stands so declared by a competent court; or
• Has been convicted of an offence, which, in the opinion of the Central Government involves a moral turpitude; or
• Has, in the opinion of the Central Government, so abused his position

after giving him a reasonable opportunity of being heard.

• The agency shall make bye-laws  to govern its  internal functions;
• The Board may allocate the functions of the Agency to the Chair person and other members subject to conditions prescribed;
• No act or proceeding of the Agency shall be invalid merely by reason of-

• Any vacancy or any defect, in the establishment of the Agency; or
• Any defect in the appointment of the member of the Agency; or
• Any irregularity in the procedure of the Agency not affecting the merits of the case.

Functions and powers of the Agency

• The Agency shall issue Government securities, maintain and manage the register of holders in accordance with the provisions of this Chapter and rules made there under;
• The functions of the Agency shall include-

• Collecting and publishing information about public debt, including borrowing by the Central Government, otherwise than under this Chapter;
• Purchasing, re-issuing and trading in Government securities; and
• Carrying out such other transactions as may be required for management of public debt;

• The Agency shall manage the contingent liabilities of the Central Government including-

• Developing ways to calculate the total contingent liability of the Central Government;
• Advising the Central Government on its  contingent liabilities; and
• Carrying out such other transactions as may be necessary to reduce the contingent liabilities of the Central Government or reduce the cost of such contingent liabilities.

• The Agency shall  undertake cash management for the Central Government, including-

• Collecting information about the cash assets of the Central Government;
• Developing systems to calculate and predict cash requirements of the Central Government;

• The Agency shall issue  Government securities in accordance with provisions of this Chapter and rules made there under subject to the terms and conditions as prescribed by the Central Government, in dematerialized form;
• The Agency shall be responsible for making payments to the holders of Government securities for which the rules may be prescribed by Central Government;
• The Agency shall maintain a resister of  holders of Securities along with the index.  The registers and index maintained by depositories shall be deemed to be the corresponding register and index for this purpose;

The Central Government shall provide all information that the Agency may reasonably require to discharge its duties.  The Central Government may also provide confidential information to the Agency,  which shall be maintained confidentially by the Agency.

Nomination

Every security holders may nominate a person in whom the securities shall vest, after his death.  If a security is held by more than one person jointly, the holders may together nominate  any person in whom such securities shall vest in the event of the death of all partners.  Unless the nomination is varied or cancelled the nominee is entitled to receive the benefits of securities after the death of the security holder or holders.

If the nominee is a minor, it shall be lawful for the holder of the securities making the nomination to appoint any person to become entitled to the securities in the event of the death of the nominee during the minority.

Transfer of securities

The Agency shall not register a transfer of government securities, unless such transfer is made in such manner, as may be prescribed.  This will not affect any order issued by a court upon the Agency. 

Evidence

A certificate issued under the common seal of the agency, specifying the Government securities held by any person, shall be prima facie evidence of the title of the person to such government securities.  Where a government  security is held in depository form, the record of the depository is the prima facie evidence of the interest of the holder.

Issue of certificates and duplicate certificates

The manner of issue of a certificate of Government securities or the duplicate thereof, the form of such certificates, the particulars to be entered in the register of holders and other matters shall be such as may be prescribed.

Liability of the Central Government

The Central Government is liable to meet the obligations arising form any financial transactions authorized by it, which is undertaken by the Agency or any funds that are received on behalf of the Central Government by the Agency.

Source of funds

The Agency shall, in consultation with the Central Government make bye laws to provide for fees payable for the services rendered.  The Central Government shall pay such fees to the Agency as may be mentioned in the bye laws.  The Central government may make grants or loans of such sums of money as it thinks fit for being utilized for the purposes of carrying out its functions.  

A fund shall be constituted for this purposed and maintained by the Agency.  In the said fund the following shall be credited-

• All grants, loans and fees received by the Agency; and
• All sums received by the Agency from such other sources, as may be prescribed by the Central Government.

The funds shall be applied for meeting the expenses on objects and for the purposes authorized by the Chapter..

Accounts, Audit and reports

The Agency shall maintain accounts and other relevant records and prepare an annual statement of accounts in such form, as may be prescribed.  The Accounts of the Agency shall be audited annually by the Comptroller and Auditor General of India.   The Board must prepare and submit to the Central Government an annual report within a period of 90 days from the end of a financial year and such other reports as may be prescribed by the Central Government.  The audited accounts shall be forwarded to the Central Government who in turn shall cause the accounts, the audit report and  the annual report to be laid before each House of Parliament.

Power of Central Government

The Central Government may issue to the Agency, by an order in writing, directions on policy from the time to time.   The decision of the Central Government as to whether a direction is one of policy or not is final.  Before issuing any director the Agency must be given a reasonable opportunity of being heard to express its views. The Agency is bound by the directions issued by the Central Government.

The Central Government is empowered to make rules for carrying out the purposes of this Chapter.  The Central Government may prescribe-

• The terms and other conditions of the office of the Chairperson and other members of the Board;
• The terms and conditions of Government securities;
• The manner of making payments to and claims by holders of securities;
• The manner of maintenance of register of holders;
• The manner of making and cancelling nomination;
• The manner of transfer of securities;
• The source of funds for the Agency;
• Manner of maintenance of accounts and form of annual report of the Agency

Miscellaneous

Part V deals with the miscellaneous provisions.  The members and employees of Agency are deemed to be public servants.   Protection is available to them from taking action in good faith.   The revenue earned by the Agency is exempted from taxes.  The Reserve Bank of India shall provide all information and render all assistance to the Agency as may require it to provide and render, so that the Agency is able to discharge its functions.