CHIEF GENERAL MANAGER
MUTUAL FUNDS DEPARTMENT
MFD/CIR/19/ 22474 /2002
November 20, 2002
All Mutual Funds Registered with SEBI Unit Trust of India Association of Mutual Funds in India
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Sub: Reconciliation Procedure for investment in Government Securities.
As you are aware, RBI has issued guidelines vide their circular No.P.D.O.SGL.CIRR/1945/2002-2003 dated November 1, 2002 to all SGL account holders regarding reconciliation procedure for Government Securities. In order to make the transactions in Government Securities transparent without any scope of misuse, it has been decided in consultation with RBI to introduce a system of monthly reconciliation between RBI and mutual funds maintaining SGL/CSGL Accounts in respect of Government Securities on an ongoing basis.
As per the system, the Public Debt Offices of RBI shall issue a monthly statement of balances to mutual funds maintaining SGL/CSGL Accounts. Mutual Funds in turn shall reconcile the balances reported in monthly statements, furnished by the RBI with the transactions undertaken by them. The reconciliation procedure shall be made a part of internal audit and the auditors shall check on a continuous basis about the status of reconciliation and submit a report to the Audit Committees. These reports shall also be placed in the meetings of Boards of AMCs and Trustees. Further, mutual funds shall submit a compliance certificate on a quarterly basis to the RBI, confirming the compliance of these requirements and any other guidelines issued by the RBI from time to time.
You are further advised to report its compliance to SEBI in the quarterly reports of AMCs and half-yearly reports of Trustees.
These guidelines are being issued in accordance with the provisions of Regulation 18(4)(f) and Regulation 77 of the SEBI (Mutual Funds) Regulations, 1996.