CSGL accounts are a demat form of holding government securities with the RBI, just as an investor can hold shares in demat form with a depository participant.
Government Securities are largely issued as Stocks and held in demat form to the credit of the holder in the Subsidiary General Ledger account (SGL) maintained in the books of RBI. When these securities are held by the investor through an agent like PD or Bank the agent holds another SGL account with RBI for keeping the Government Securities owned by its customers. This second account is called the Constituent Subsidiary General Ledger account (CSGL) and is a segregated SGL account for keeping securities on behalf of customers by banks and Primary Dealers.
Features of CSGL Accounts
Like a bank account gets debited or credited whenever the customer withdraws or deposits money, CSGL account also gets debited or credited on the sale or purchase of the securities.
The account holder receives a statement at periodic intervals showing the balance of securities in his account.
All the securities are maintained in demat mode, which can be converted into physical mode whenever required by the Gilt Account Holder.
Advantages of opening CSGL Accounts
- Treasury bills and Government Securities are maintained in a demat form.
- Expeditious transactions can be undertaken.
- The government securities are transferred to Gilt Account on the settlement day.
- Reduces counterparty risk due to speedy settlement.
- Collection and payment of maturity proceeds and interest is faster as the interest and maturity proceeds would be
collected by the Primary Dealer, and paid to the Gilt Account Holder.
- Reduces administrative burdens for the Gilt Account Holder.