While government employees are not allowed to engage in speculative trading, they can invest in stocks, equity, and mutual funds. The only limitation is that they should not invest in investments that are directly connected to their work or that are motivated by a conflict of interest. Mutual Funds are an excellent investment option for government employees because of their low-cost structure, no monetary limits, and SIP investment options. Government employees are also permitted to invest in the Mutual Funds market without any hindrances.
The first and most important rule to consider is that speculative trading is not permitted for government employees. This includes the frequent purchase and sale of securities. It also applies to family members and other persons acting on an employee’s behalf. Another rule restricts government employees from lending and borrowing. This means they cannot use their government position to purchase or sell securities. This is good news for employees, but it isn’t the best way to make money.
A government employee can invest in mutual funds, but he or she cannot engage in intraday or day trading. This is because they are prohibited from lending money to private individuals or institutions. This rule also prohibits government employees from engaging in short selling, intraday trading, or purchasing and selling of short-term shares. However, if you are a government employee, you may invest in mutual funds and non-convertible bonds.
In addition to this, government employees must also send intimations if they make any investments that exceed six months of their basic pay. Moreover, the government ministry has issued a proforma that employees can fill in and submit by January 31 of the following year. These intimations must be submitted as per the rules of the service. Therefore, it is imperative to follow the rules of service if you plan to engage in share trading.
In addition, government employees should read the rules of the share market before investing. While applying for an IPO, government employees cannot engage in price fixing within the same company. Also, government employees should avoid allotting shares in government business enterprises through relatives and other individuals, which are considered “incompatible with official duties”.
When investing in equity shares, it is crucial for government employees to follow the rules of government policy. They should avoid engaging in speculative trading because government employees represent the government and are responsible for the funds. Furthermore, the stock market involves speculative trading, which is in opposition to government ethics. This is the reason why the Central Government has increased the limit for government employees to invest in the stock market. Essentially, this new limit is equivalent to six months’ basic pay.