DRF-GS

Government securities follow their own route into the depository. The form that starts it is the DRF-GS, the Dematerialisation Request Form for Government Securities.

Physical G-Sec certificates are registered with a Public Debt Office (PDO) of the RBI, not with a company's R&T Agent. So the paperwork is different. With the DRF-GS the client submits the certificates and an RBI-prescribed Form of Transfer. The certificates are not punched with holes but endorsed. They go to the depository, not to an R&T Agent, and the depository sends them on to RBI for credit to its Constituent SGL account.

The same form has a second use. An investor who holds G-Secs in book-entry form with another SGL-eligible entity can use a DRF-GS with an SGL credit advice to move them into the depository.

One caveat from the workbook: in CDSL, the DRF for G-Secs is the same form used for other securities. The form's specification need not be the same across depositories.

From Chapter 11, section 11.4.1.

Route 1 — dematerialising physical certificates.

• DPs accept requests from registered holders only. Partial dematerialisation of a certificate is not allowed.
• Documents: the physical certificates and the Form of Transfer, printed on a single sheet of semi-security paper.
• The client fills in: the option "Submitting Physical G-Sec to (depository)", account number, holder name, name of the security, face value to be dematerialised (in words and figures), certificate number.
• The DP checks the order of holders' names against the account, the certificate details against the form, the signature, the ISIN, the security descriptor and the face value. For trusts and corporates, it checks that the signatories' registration numbers are on the Form of Transfer, since a signature difference may lead RBI to reject the transfer.
• Loan codes. Different loan codes need separate DRF-GS and Forms of Transfer. Consecutive certificate numbers under a single loan code can share one Form of Transfer.
• Certificates from a PDO outside Mumbai are accepted only if the Form of Transfer is attested by that PDO. Mutilated or unreadable certificates are not accepted.
• Entry. ISIN and loan code are verified at two levels. The number of securities goes in the quantity field. The system generates a DRN, written on the form. A different person from the one who entered it verifies the entry before release.
• Endorsement. The DP writes "Tendered for Cancellation and credit to SGL A/c No. ___, Mumbai" on the reverse, and does not punch holes.
• Despatch to the depository within seven working days of accepting the documents. The depository completes the Form of Transfer and submits it to RBI for credit to its Constituent SGL account.

Route 2 — moving SGL holdings in. The client submits a DRF-GS with an SGL credit advice and a request letter for a value free transfer. The source SGL account must be registered with PDO, RBI, Mumbai, shown by the prefix "BY". After the DRN is generated and verified, the G-Sec cell asks the SGL counterparty to initiate the transfer in RBI's E-Kuber system. The depository confirms it there, and the balances reach the holder's demat account.

Objections. The depository acts as R&T Agent for G-Secs. Its G-Sec cell rejects a request if the DRF-GS does not match the electronic request, or if RBI rejects the transfer for signature mismatch or unregistered signatories.

The mirror form. Rematerialisation uses the RRF-GS, which the DP must forward to the depository within seven days.

Illustrative holder and holdings; the procedure is the workbook's.

Mr Venkataraman of Chennai holds physical G-Sec certificates for two loans issued through PDO Mumbai:

How many forms?

• Loan code 1: one DRF-GS and one Form of Transfer, because the certificate numbers are consecutive under a single loan code.
• Loan code 2: a separate DRF-GS and a separate Form of Transfer.
• Total face value to be dematerialised: 3,00,000 + 50,000 = Rs 3,50,000.

What he cannot do: dematerialise only Rs 1,00,000 of certificate BY3402. Partial demat of a certificate is not entertained.

At the DP. A clerk enters the requests, and the ISIN and loan code are checked at two levels. A second official verifies the entries against the DRNs. The DP endorses each certificate "Tendered for Cancellation and credit to SGL A/c No. ___, Mumbai", without punching holes, and sends everything to the depository within seven working days.

His sister's case. She holds Rs 5,00,000 of G-Secs in a Constituent SGL account with a bank whose SGL number begins "BY". She submits a DRF-GS with the SGL credit advice and a value free transfer request letter. The transfer runs through RBI's E-Kuber system.

Chapter 11 (Special Services - Debt Instruments and Government Securities, 10% weightage) sets out both DRF-GS routes, the objections process and the matching RRF-GS. Expect questions on who can submit (registered holders only), partial dematerialisation (not allowed), the endorsement instead of punching holes, the seven-working-day despatch, and the "BY" prefix.

• No holes. Unlike other certificates, G-Sec certificates are endorsed, not punched.
• Sent to the depository, not an R&T Agent. The depository acts as R&T Agent for G-Secs and sends the Form of Transfer to RBI.
• Registered holders only; no partial demat of a certificate.
• One DRF-GS per loan code. One Form of Transfer can cover consecutive certificates under a single loan code.
• Outside-Mumbai PDO certificates need the Form of Transfer attested by that PDO.
• "BY" prefix marks an SGL account registered with PDO, RBI, Mumbai.
• Seven working days to despatch documents to the depository after accepting them from the client.
• CDSL uses its ordinary DRF for G-Secs. The separate form is not universal, and some fields "may not be required by both the depositories".
• Value free transfer is the request that accompanies an SGL credit advice, not a Form of Transfer.