Can Government Employees Trade & Invest in Stock Market

Introduction

Government employees often wonder whether they can engage in trading and investment activities. In this blog, we will address some common questions related to this topic. We will discuss the rules and regulations surrounding government employees' participation in speculation, trading, and investment. We will also explore whether government employees can authorise relatives to trade on their behalf. Finally, we will highlight a recent change in the rules that allows government employees to invest more in mutual fund schemes and stocks. So let's get started.

 

Can Government Employees Do Intraday Trading?

According to the Central Civil Service Conduct Rule, 1964, no government employee, whether they work for the central government, state government, or Union Territory, can participate in speculation or trading activities. Speculation is defined as engaging in high-risk, high-reward trading activities. This includes currency trading, commodity trading, F&O, option trading, and equity stock trading. Intraday trading, specifically, is not allowed for government employees.

Occasional investing, on the other hand, is permitted. This refers to making small investments, such as SIPs in mutual funds or stocks, for a longer-term period, such as five or ten years. However, regular buying and selling with the intention of short-term gains is considered speculation and is not allowed.

 

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Can Government Employees Authorise Relatives to Trade on Their Behalf?

The rules regarding government employees authorising relatives to trade on their behalf are strict. As per the rules, no government servant can permit any member of their family or any person to make investments that could potentially influence them in the discharge of their official duties. This means that if a government employee authorises a family member to trade or invest on their behalf, it is not allowed.

Even trading through a family member's account, such as a brother, parents, or spouse, is not permitted if they do not have their own source of income. This is to prevent any influence on the government employee's duty and to ensure transparency in income sources.

 

Investing in IPOs and FPOs

Government employees, whether they are involved in group A, B, C, or D, are not allowed to invest in Initial Public Offerings (IPOs) or Follow-on Public Offerings (FPOs). The government has made it clear that neither the government employee nor any family member can apply for IPOs or FPOs. This rule applies to all government employees, regardless of their income source or position.

 

 

Good News for Government Employees

The good news is that the government has recently changed a 27-year-old rule, allowing government officials to invest more in mutual fund schemes and stocks. Previously, group A and B officers were required to inform the government if their total transactions in shares, mutual funds, and debentures exceeded 50,000 rupees in a financial year. However, the government has increased this limit to six times the previous amount, giving government employees more freedom to invest.

This change in the rules takes into consideration the salary structure of government officers and aims to provide them with increased opportunities for investment. Group C and D officers have also seen a six-fold increase in their investment limit, from 25,000 rupees to a higher amount.

 

Conclusion

In conclusion, government employees are generally not allowed to engage in trading and speculation activities. Intraday trading and frequent buying and selling are considered speculation and are prohibited. However, occasional investing for the long term is permitted. Authorising relatives to trade on their behalf or trading through their accounts is also not allowed, as it can influence the government employee's duty. IPOs and FPOs are off-limits for government employees as well.

Nevertheless, the recent change in the rules regarding investment limits in mutual fund schemes and stocks is good news for government employees. It provides them with more opportunities to invest and grow their wealth. It is important for government employees to understand and abide by these rules to avoid any legal consequences. By doing so, they can ensure a peaceful and compliant financial journey.

 

 

Thank you for reading this informational blog. If you have any further questions, please feel free to leave a comment below. We will be happy to address your queries