The Government on Monday announced that the outstanding balance of ‘7.37% Government Securities 2023’ due on 16th April 2023 will be payable on 15th April 2023 as the 16th is a Sunday.
It is a common belief of many people that if your payment due date falls on Sunday or a holiday the same can be paid on the next working day. However, it is not correct in all cases. I furnish here the clarification on the redemption date of the debt securities/Coupons when they fall on a Sunday or a public holiday under the NI Act
As per sub-regulations 24(2) and 24(3) of Government Securities Regulations, 2007 payment of maturity, proceeds to the registered holder of Government Security, and no interest will accrue thereon from the due date. In the event of a holiday being declared on repayment day by any State Government under the Negotiable Instruments Act, 1881, the Loan/s shall be repaid by the paying offices in that State on the previous working day of that holiday date.
In the SEBI circular/CIR/IMD/DF-1/122/2016 dated 11-Nov-2016, it was mentioned that if the coupon payment date of the debt securities, falls on a Sunday or a holiday, the coupon payment shall be made on the next working day. However, the subsequent coupon schedule, like semi-annual payment, would not be disturbed merely because the payment date in respect of one particular coupon payment has been postponed earlier because it has fallen on a holiday.
According to the clarification of SEBI of the above date, if the maturity date of the debt securities falls on a Sunday or a holiday, the redemption proceeds shall be paid on the previous working day.
SEBI further clarified that in case of a leap year, if February 29 falls during the tenor of security, then the number of days shall be reckoned as 366 days (Actual/Actual day count convention) for a whole one-year period, irrespective of whether the interest is payable annually, half-yearly, quarterly or monthly, etc. It is thus emphasized that for a half-yearly interest payment, 366 days would be reckoned twice as the denominator; for quarterly interest, four times, and for monthly interest payment, twelve times.
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