Security :
The security to be furnished in respect of the bonds will be as follows:
(i) The security furnished should either be cash, Government promissory notes, post office savings, bank deposits, national savings Certificates, National Defence Bonds, National Defence Gold Bonds, 1980 or similar realisable Government papers. Promissory Notes and stock Certificates of the Central Government or a State Government shall be accepted subject to the conditions laid down in clause (ii) of Rule 274 of GFR.
(ii) Deposit receipt of bank can also be pledged as securities for Central Excise Bonds subject to certain specific conditions under Rule 274 (vi) of G.F.R. The conditions inter alia are:
(a) The deposit receipt shall be made out in the name of the pledgee or if it is made out in the name of the pledger, the bank shall certify on it that the deposit can be withdrawn only on demand or with the sanction of the pledgee.
(b) The depositors shall agree in writing to undertake any risk involved in the investment and make good the depreciation, if any.
(c) The depositors shall receive the interest when due, direct from the bank on a letter from the pledgee authorising the bank to pay it to him.
(d) The responsibility of the pledgee in connection with the deposit and the interest on it will cease when he issues a final withdrawal order to the depositor and sends an intimation to the Bank that he has done so.
(e) Only the larger scheduled banks are to be considered as recognized banks approved by Government for the purpose of item of Rule 274 of G.F.R.
(f) Interest on the securities will, however, continue to accrue and will be realised by the holders on discharge of the bond and return of the securities.
(g) Where the same bond and security continue for over one year, arrangements must be made for credit or payment of the interest on such securities to the bonders.
(h) On cash securities no interest is payable. In the case of Savings Bank Account, the interest may be paid to the parties on claim preferred by them periodically or can be collected after the amount is returned to them. In respect of other securities, arrangements are to be made for the payment of interest at regular intervals of 6 months.