GOVERNMENT OF INDIA
MINISTRY OF PERSONNEL,PUBLIC GRIEVANCES AND PENSIONS
RAJYA SABHA
UNSTARRED QUESTION NO-1223
ANSWERED ON-28.12.2017
Restriction in conduct rules on investments by employees
1223 . Shri Narayan Lal Panchariya
(a) whether there are any restrictions
under relevant conduct rules on investments by Central Government
employees in stock market/financial market instruments;
(b) if so, the details thereof and the reasons therefor;
(c) whether Government is considering any proposal for giving greater
freedom to Central Government employees to invest in such instruments;
and
(d) if so, the details thereof?
ANSWER
MINISTER OF STATE IN THE MINISTRY OF
PERSONNEL, PUBLIC GRIEVANCES AND PENSIONS AND MINISTER OF STATE IN THE
PRIME MINISTER’S OFFICE (DR. JITENDRA SINGH)
(a) & (b): Yes Sir. Rule 16 of the
Central Civil Services (Conduct) Rules, 1964, is relevant for investment
by Central Government employees in stock/ financial market instruments.
The provisions of Rule 16 are reproduced as under:
"(1) No Government servant shall
speculate in any stock, share or other investment: Provided that nothing
in this sub-rule shall apply to occasional investments made through
stock brokers or other persons duly authorised and licensed or who have
obtained a certificate of registration under the relevant law.
Explanation - Frequent purchase or sale or both, of shares, securities
or other investments shall be deemed to be speculation within the
meaning of this sub-rule."
(2) (i) No Government servant shall
make, or permit any member of his family or any person acting on his
behalf to make, any investment which is likely to embarrass or influence
him in the discharge of his official duties. For this purpose, any
purchase of shares out of the quotas reserved for Directors of Companies
or their friends and associates shall be deemed to be an investment
which is likely to embarrass the Government servant.
(ii) No Government servant who is
involved in the decision making process of fixation of price of an
Initial Public Offering or Follow-up Public Offering of shares of a
Central Public Sector Enterprise shall apply, either himself or through
any member of his family or through any other person acting on his
behalf, for allotment of shares in the Initial Public Offerings or
Follow-up Public Offerings of such Central Public Sector Enterprise.
(3) If any question arises whether any
transaction is of the nature referred to in sub-rule (1) or sub-rule(2),
the decision of the Government thereon shall be final.
(4) (i) No Government servant shall,
save in the ordinary course of business with a bank or a public limited
company, either himself or through any member of his family or any other
person acting on his behalf,
(a) lend or borrow or deposit money, as a
principal or an agent, to, or from or with, any person or firm or
private limited company within the local limits of his authority or with
whom he is likely to have official dealings or otherwise place himself
under any pecuniary obligation to such person or firm or private limited
company; or
(b) lend money to any person at interest or in a manner whereby return in money or in kind is charged or paid:
Provided that a Government servant may
give to, or accept from, a relative or a personal friend a purely
temporary loan of a small amount free of interest, or operate credit
account with a bona fide tradesman or make an advance of pay to his
private employee:
Provided further that nothing in this
sub-rule shall apply in respect of any transaction entered into by a
Government servant with the previous sanction of the Government.
(ii) When a Government servant is
appointed or transferred to a post of such nature as would involve him
in the breach of any of the provisions of sub-rule (2) or sub-rule (4),
he shall forthwith report the circumstances to the prescribed authority
and shall thereafter act in accordance with such order as may be made by
such authority.
2. Further, vide O.M. No.
11013/6/91-Ests.(A) dated 8.04.1992 (copy enclosed), it was clarified
that shares, securities, debentures etc. are treated as movable property
for the purpose of Rule 18 (3) of the Central Civil Services (Conduct)
Rules, 1964, which provides for intimation/ permission of an individual
transaction, if the value of such transaction exceeds two months of
basic pay of the Government servant.
(c) & (d): At present, there is no
proposal under consideration of the Government for giving greater
freedom to Central Government employees to invest in stock market/
financial market instruments.
