SGL stands for 'Subsidiary General Ledger' account. It is a facility provided by RBI to large banks and financial institutions to hold their investments in Government securities and Treasury bills in the electronic book-entry form. Such institutions can settle their trades for securities held in SGL through a Delivery-versus-Payments (DVP) mechanism which ensures movement of funds and securities simultaneously.

As all investors in Government securities do not have an access to the SGL accounting system, RBI has permitted such investors to hold their securities in physical stock certificate form. They may also open a Constituent SGL account with any entity authorised by RBI for this purpose and thus avail of the DVP settlement. Such client accounts are referred to as Constituent SGL accounts.

Due to the wholesale nature of the market, retail investors usually loose their competitive strength due to their physical holdings. Further, absence of a common settlement agency makes it difficult for the retail investors to settle these transactions on a bilateral basis.

To redress the problems faced by retail participants in the market, NSCCL offers Constituent SGL facility to such participants. RBI has allowed NSCCL to open SGL and current accounts for this purpose. RBI has also permitted PFs/Trusts to open their accounts with NSCCL vide its letter PDO.SGL.07.18.21/ 97/98 dated March 30, 1998. NSCCL is also taking steps to setup a common clearing and settlement framework for its SGL constituents. This endeavour will help the market to have uniform settlement procedures and will help evolve the market to a higher plane.